Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document Information Line Items | |
Entity Registrant Name | Lianluo Smart Ltd |
Document Type | 20-F |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | false |
Entity Central Index Key | 0001474627 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2020 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Document Annual Report | true |
Document Shell Company Report | false |
Document Transition Report | false |
Entity File Number | 001-34661 |
Entity Incorporation, State or Country Code | D8 |
Entity Interactive Data Current | Yes |
Common stock – Class A | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 2,210,683 |
Common stock – Class B | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 1,388,888 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 1,816,177 | $ 22,834 |
Restricted cash | 3,500,000 | |
Accounts receivable, net | 4,940 | 61,779 |
Other receivables and prepayments, net | 33,942 | 18,867 |
Advances to suppliers, net | 8,266 | 7,727 |
Inventories, net | 88,603 | 1,085,016 |
Other taxes receivable | 246,685 | 337,412 |
Marketable equity securities | 273,913 | 143,478 |
Total Current Assets | 5,972,526 | 1,677,113 |
Property and equipment, net | 75,653 | 656,840 |
Total Assets | 6,048,179 | 2,333,953 |
CURRENT LIABILITIES: | ||
Accounts payable | 18,614 | 226,215 |
Contract liability | 48,116 | 267,365 |
Accrued expenses and other current liabilities | 866,334 | 1,530,473 |
Warranty obligation | 728 | |
Due to related parties | 1,784,058 | 1,208,331 |
Total Current Liabilities | 2,717,122 | 3,233,112 |
OTHER LIABILITIES | ||
Warrants liability | 518,666 | 389,630 |
Total Liabilities | 3,235,788 | 3,622,742 |
Commitments and Contingency | ||
SHAREHOLDERS’ EQUITY | ||
Common stock – Class A, par value $0.021848: 4,736,111 shares authorized as of December 31, 2020 and December 31, 2019; 2,210,683 and 836,933 shares issued and outstanding as of December 31, 2020 and December 31, 2019 | 48,299 | 18,285 |
Common stock – Class B, par value $0.021848: 1,513,889 shares authorized as of December 31, 2020 and December 31, 2019; 1,388,888 shares issued and outstanding as of December 31, 2020 and December 31, 2019 | 30,345 | 30,345 |
Additional paid-in capital | 47,995,772 | 40,833,249 |
Accumulated deficit | (47,848,895) | (44,607,198) |
Accumulated other comprehensive income | 2,586,870 | 2,436,530 |
Total Equity | 2,812,391 | (1,288,789) |
Total liabilities and equity | $ 6,048,179 | $ 2,333,953 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock – Class A | ||
Common stock, par value (in Dollars per share) | $ 0.021848 | $ 0.021848 |
Common stock, shares authorized | 4,736,111 | 4,736,111 |
Common stock, shares issued | 2,210,683 | 836,933 |
Common stock, shares outstanding | 2,210,683 | 836,933 |
Common stock – Class B | ||
Common stock, par value (in Dollars per share) | $ 0.021848 | $ 0.021848 |
Common stock, shares authorized | 1,513,889 | 1,513,889 |
Common stock, shares issued | 1,388,888 | 1,388,888 |
Common stock, shares outstanding | 1,388,888 | 1,388,888 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | |||
Revenues | $ 358,536 | $ 383,458 | $ 559,386 |
Costs of revenue | (646,653) | (743,744) | (757,901) |
Gross loss | (288,117) | (360,286) | (198,515) |
Selling expenses | (91,820) | (835,270) | (2,082,829) |
General and administrative expenses | (2,482,201) | (2,593,808) | (3,675,465) |
Provision for doubtful accounts and inventories | (113,000) | (13,011) | (22,229) |
Impairment loss for intangible assets | (3,281,779) | ||
Operating loss | (2,975,138) | (3,802,375) | (9,260,817) |
Financial income (expenses) | 561 | 557 | (37,899) |
Other expense, net | (23,193) | (32,227) | (211,151) |
Unrealized gain (loss) on marketable securities | 130,435 | (1,356,565) | |
Change in fair value of warrants liability | (129,036) | 739,616 | 599,865 |
Loss on disposal of a subsidiary | (245,326) | ||
Loss before income tax | (3,241,697) | (4,450,994) | (8,910,002) |
Income tax benefit | |||
Net loss | (3,241,697) | (4,450,994) | (8,910,002) |
Other comprehensive (loss) income: | |||
Foreign currency translation gain (loss) | 150,340 | (166,892) | (515,477) |
Comprehensive loss | $ (3,091,357) | $ (4,617,886) | $ (9,425,479) |
Weighted average number of common shares used in computation | |||
-Basic and diluted (in Shares) | 3,389,069 | 2,225,821 | 2,202,176 |
Net loss per share of common stock | |||
-Basic and diluted (in Dollars per share) | $ (0.96) | $ (2) | $ (4.05) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Common stock – Class A | Common stock – Class B | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Balance at Dec. 31, 2017 | $ 16,936 | $ 30,345 | $ 39,233,137 | $ (31,246,202) | $ 3,118,899 | $ 11,153,115 |
Balance (in Shares) at Dec. 31, 2017 | 775,183 | 1,388,888 | ||||
Issuance of shares upon excise of share-based awards | $ 52 | 17,799 | 17,851 | |||
Issuance of shares upon excise of share-based awards (in Shares) | 2,375 | |||||
Issuance of shares to non-employees | $ 1,297 | 1,122,702 | 1,123,999 | |||
Issuance of shares to non-employees (in Shares) | 59,375 | |||||
Stock based compensation | 247,134 | 247,134 | ||||
Foreign currency translation | (515,477) | (515,477) | ||||
Net loss | (8,910,002) | (8,910,002) | ||||
Balance at Dec. 31, 2018 | $ 18,285 | $ 30,345 | 40,620,772 | (40,156,204) | 2,603,422 | 3,116,620 |
Balance (in Shares) at Dec. 31, 2018 | 836,933 | 1,388,888 | ||||
Stock based compensation | 69,176 | 69,176 | ||||
Exemption of borrowings from related party | 143,301 | 143,301 | ||||
Foreign currency translation | (166,892) | (166,892) | ||||
Net loss | (4,450,994) | (4,450,994) | ||||
Balance at Dec. 31, 2019 | $ 18,285 | $ 30,345 | 40,833,249 | (44,607,198) | 2,436,530 | (1,288,789) |
Balance (in Shares) at Dec. 31, 2019 | 836,933 | 1,388,888 | ||||
Issuance of shares | $ 30,014 | 7,162,523 | 7,192,537 | |||
Issuance of shares (in Shares) | 1,373,750 | |||||
Foreign currency translation | 150,340 | 150,340 | ||||
Net loss | (3,241,697) | (3,241,697) | ||||
Balance at Dec. 31, 2020 | $ 48,299 | $ 30,345 | $ 47,995,772 | $ (47,848,895) | $ 2,586,870 | $ 2,812,391 |
Balance (in Shares) at Dec. 31, 2020 | 2,210,683 | 1,388,888 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | |||
Net loss | $ (3,241,697) | $ (4,450,994) | $ (8,910,002) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Stock-based compensation to employees | 69,176 | 247,134 | |
Stock-based compensation to non-employees | 179,112 | 944,887 | |
Depreciation and amortization | 451,884 | 778,117 | 827,630 |
Loss from disposal of inventories | 6,218 | 58,992 | |
Change in fair value of warrants liability | 129,036 | (739,616) | (599,865) |
Loss on disposal of equipment and intangible assets | 1,499 | 18,502 | 232,171 |
Provision for doubtful accounts: | |||
– accounts receivable | 30,572 | 10,148 | 5,826 |
– other receivables and prepayments | 26,688 | 499 | 16,403 |
Change in warranty obligation | (728) | (7,911) | (10,261) |
Provision for inventory obsolescence | 55,739 | 2,363 | |
Impairment loss for intangible assets | 3,281,779 | ||
Unrealized (gain) loss on marketable securities | (130,435) | 1,356,565 | |
Loss on disposal of a subsidiary | 245,326 | ||
Changes in assets and liabilities: | |||
Decrease (increase) in accounts receivable | (48,635) | 20,222 | (88,270) |
Decrease (increase) in advances to suppliers | |||
– third parties | (539) | 145,024 | 233,490 |
– related party | |||
Decrease(increase) in other receivables and prepayments | (29,176) | 69,773 | 23,352 |
Increase in interest receivable – related party | (2,523) | (161,384) | |
Decrease(increase) in inventories | 209,521 | 255,592 | (137,464) |
Decrease(increase) in other taxes receivable | 17,526 | 36,858 | (92,897) |
Decrease(increase) in accounts payable | (60,944) | (8,234) | 186,561 |
Increase in interest payable- related party | 2,053 | 178,708 | |
Decrease in due to related parties – Trade | |||
Increase (decrease) in contract liabilities | (117,476) | 34,799 | (80,602) |
Increase in accrued expenses and other current liabilities | 125,514 | 553,354 | 214,245 |
Net cash used in operating activities | (2,336,325) | (1,670,903) | (3,629,567) |
Cash flows from investing activities | |||
Proceeds from disposal of equipment | 23,016 | 1,309 | |
Capital expenditures and other additions | (776,328) | ||
Loan to a related party | (6,000,000) | ||
Repayment from a related party | 549,192 | ||
Net cash payments from disposal of subsidiaries | (2,354) | ||
Net cash (used in) provided by investing activities | (2,354) | 23,016 | (6,225,827) |
Cash flows from financing activities | |||
Loans from related parties | 498,191 | 1,362,681 | 3,682,642 |
Net proceeds from option exercises | 17,851 | ||
Repayment of the loan from related party | (33,178) | ||
Net proceeds from issuance of common stock, net of issuance costs | 7,192,537 | ||
Net cash provided by financing activities | 7,657,550 | 1,362,681 | 3,700,493 |
Effect of exchange rate fluctuations on cash and cash equivalents | (25,528) | (169,269) | (177,275) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 5,293,343 | (454,475) | (6,332,176) |
Cash, cash equivalents and restricted cash at beginning of year | 22,834 | 477,309 | 6,809,485 |
Cash, cash equivalents and restricted cash at end of year | 5,316,177 | 22,834 | 477,309 |
Cash paid during the year for: | |||
Income tax | |||
Interest | 14,840 | ||
Reconciliation of cash, cash equivalents and restricted cash in consolidated statements of cash flows: | |||
Cash and cash equivalent | 1,816,177 | 22,834 | 477,309 |
Restricted cash | 3,500,000 | ||
Cash, cash equivalent and restricted cash | $ 5,316,177 | $ 22,834 | 477,309 |
Non-cash investing and financing activities: | |||
Acquisition of property and equipment and construction in progress by decreasing inventories | 947,172 | ||
Offset short-term borrowings - related party against loans to a related party (including accrued interests) | $ 5,381,589 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [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 subsidiaries, Beijing Dehaier Medical Technology Co., Limited (“Beijing Dehaier”) and Lianluo Connection Medical Wearable Device Technology (Beijing) Co., Ltd. (“Lianluo Connection”), which were both formed in Beijing, the PRC, for the business development in the health equipment market. 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 “Hangzhou Lianluo”) 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 14) On August 13, 2020, Lianluo Connection sold Beijing Dehaier to China Mine United Investment Group Co., Ltd. for a cash consideration of RMB 0. On September 18, 2020, Lianluo Smart Limited set up a wholly-owned subsidiary, Hangzhou Lianluo Technology Co., Ltd. (“Lianluo Technology”), in Hangzhou, PRC. Lianluo Technology was in the business of technology development. It has no operation as of December 31, 2020. On September 23, 2020, Lianluo Smart set up a new subsidiary Lightning Delaware Sub, Inc. (“Merger Sub”), a Delaware corporation, through which the company entered into a Merger Agreement with Newegg. It has no operation as of December 31, 2020. Currently, Lianluo Smart wholly owns Lianluo Connection, Lianluo Technology and Merger Sub. Lianluo Smart, through its subsidiary, Lianluo Connection, now distributes branded, proprietary medical equipment, such as sleep apnea machines and CPR. Besides, since fiscal year 2018, the Company has been providing examination service to hospitals and medical centers through its developed medical wearable device. Doctors could refer to examination results provided by such device in making diagnosis regarding Obstructive Sleep Apnea Syndrome (“OSAS”). On October 21, 2020, the Company completed a share combination of its common shares at a ratio of one-for-eight, which decreased the Company’s outstanding Class A common shares from 17,685,475 shares to 2,210,683 shares and the Company’s outstanding Class B common shares from 11,111,111 shares to 1,388,888 shares. This share combination also decreased the Company’s authorized shares to 6,250,000 common shares of par value of US$0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares |
Going Concern and Liquidity
Going Concern and Liquidity | 12 Months Ended |
Dec. 31, 2020 | |
Going Concern [Abstract] | |
GOING CONCERN AND LIQUIDITY | 2. GOING CONCERN AND LIQUIDITY As of December 31, 2020, the Company had $1.82 million in cash and cash equivalents which increased from $0.02 million on December 31, 2019. The Company’s principal sources of liquidity have been proceeds from issuances of equity securities and loans from related parties. As reflected in the consolidated financial statements, the Company had a net loss of $3.24 million and used $2.34 million of cash in operation activities for the year ended December 31, 2020. The ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the necessary financing to meet the Company’s obligations and repay our liabilities arising from normal business operations when they become due. The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company’s consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as going concern. The Company’s principal sources of liquidity have been proceeds from issuances of equity securities and loans from related parties. The Company had a working capital of $3.26 million as of December 31, 2020. In February and March 2020, the Company obtained approximately $7.2 million equity financing, net of placement agent’s commissions and other expenses. In late January 2021, 1,255,000 of warrants were exercised resulting in aggregate cash proceeds to the Company of $6.8 million. Considering equity financing and the cost cutting activities, the Company believes that the current cash and cash equivalents and the anticipated cash flows from operations will be sufficient to meet the anticipated working capital requirements and expenditures for the next 12 months. COVID-19 Assessment On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus first surfaced in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. As a result of these events, the Company assessed its operations, working capital, finances and capital formation opportunities, and implemented, in late December 2019 and early February 2020, a downsizing of the Company’s operations, including workforce reductions, reductions of salaried employee compensation and a reduction of hours worked to preserve cash resources, cut costs and focus the Company’s operations on customer-centric sales and project management activities. The extent to which COVID-19 will impact the Company’s business and financial results will depend on future developments, which are uncertain and cannot be predicted at this time. The Company’s service was suspended due to restrictions and hospital closures except for essential services in February 2020 and recovered gradually in March 2020 as hospitals began to resume business. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. 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. All inter-company transactions and balances are eliminated in consolidation. Share Combination On October 21, 2020, the Company completed a share combination of its common shares at a ratio of one-for-eight, which decreased the Company’s outstanding Class A common shares from 17,685,475 shares to 2,210,683 shares and the Company’s outstanding Class B common shares from 11,111,111 shares to 1,388,888 shares. This share combination also decreased the Company’s authorized shares to 6,250,000 common shares of par value of US$0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares. Accordingly, all share and per share information has been restated to retroactively show the effect of this share combination. Foreign currency translation and transactions The functional currency of Lianluo Smart Limited is United States dollars (“US$” or “$”). The functional currency of Lianluo Connection is Renminbi (“RMB”), and PRC is the primary economic environment in which the Company operates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net income for the respective periods. The financial statements of the Company’s foreign operations are translated into US$ in accordance with ASC 830-10, “Foreign Currency Matters”. For financial reporting purposes, the financial statements of the Company’s PRC subsidiary are prepared using RMB are translated into Company’s reporting currency, the US$. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and Shareholders’ equity is translated at historical exchange rates except for the change in retained earnings during the year which is the result of the income. The cumulative translation adjustments are recorded in accumulated other comprehensive income in the accompanying consolidated statements of shareholders’ equity. The exchange rates applied are as follows: December 31, December 31, RMB to US$ exchange rate at balance sheets dates, 6.5249 6.9762 Year Ended December 31, 2020 2019 2018 Average RMB to US$ exchange rate for each year 6.8976 6.8985 6.6090 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. The source of the exchange rates is generated from People’s Bank of China. 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, reserve for doubtful accounts, valuation of inventories, impairment testing of long-term assets, standard warranty obligation, warrants liability, stock-based compensation, recoverability of intangible assets, 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 in the PRC. Restricted Cash As of December 31, 2020, restricted cash of $3.5 million represents the cash balance placed into a U.S. bank account designated by a third-party escrow agent mutually selected by the Company and Newegg. The cash can only be used by the Company and Newegg to (i) defend, indemnify and hold harmless the Parties and each of their respective Affiliates and Representatives against, and satisfy any Liabilities relating to, any Actions relating to the Securities Purchase Agreements dated February 12, 2020, February 21, 2020 and February 27, 2020 between LLIT, Sabby Volatility Warrant Master Fund, Ltd., Intracoastal Capital LLC, and Anson Investments Master Fund LP or the Class A Common Share Purchase Warrants issued on February 14, 2020, February 25, 2020, and March 2, 2020, in each case as amended or restated and (ii) pay the amount of any fee that is payable from the Company to Newegg pursuant to the Merger Agreement. Accounts Receivable, net Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for expected losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowance when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balance, the Company considers many factors, including historical experience, current conditions, and reasonable and supportable forecasts. Accounts are written off after exhaustive efforts at collection. Accounts receivable terms typically are net 60-180 days from when the services were provided, or when goods were delivered. At December 31, 2020 and 2019, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $38,995 and $36,416, respectively. Other Receivables and Prepayments, net Other receivables and prepayments primarily include advances to employees, short-term loan and deposits to landlords and service providers. Management regularly reviews aging of receivables and prepayments 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 a 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. 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 Company’s carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments are a reasonable estimate of their fair values because carrying value of cash and cash equivalents, accounts receivable, accounts payable, other payables and accrued liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term related party borrowings were not materially different from their carrying value as presented due to the short maturities. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. 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 marketable equity securities are accounted at fair value, with changes in fair value recorded through earnings. The fair value of marketable equity securities was determined using the quote price in the active market, with Level 1 inputs (Note 9). The fair value of warrants was determined using the Black Scholes Model, with level 3 inputs (Note 14). 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 has 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 (Note 14). Inventories Inventories include finished goods relating to medical devices. Inventories are stated at the lower of cost or net realizable value. Cost is determined on a weighted-average basis. Management compares the cost of inventories with the net realizable value and writes down inventories to net realizable value, if lower. Net realizable value is based on estimated selling prices in the ordinary course of business less cost to sell. These estimates are based on the current market and economic condition and the historical experience of selling products of similar nature. Management of the Company reassesses the estimations at the end of each reporting period. 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: Leasehold improvements Shorter of the useful lives or the lease term Machinery and equipment 2 - 3 years Furniture and office equipment 3 - 5 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 Patent rights 10 years Other software 5 years Impairment of Long-Lived Assets Long-lived assets such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be fully 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 undiscounted 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 determined that, for the years ended December 31, 2020, 2019 and 2018, impairment loss for intangible assets was $nil, $nil and $3,281,779, respectively. Equity securities The Company’s equity securities represent equity investments in Guardion Health Sciences, Inc. (“GHSI”) made in November 2017. The Company holds less than 5% of the GHSI’s total shares. Details see Note 9. The equity securities were accounted for as non-marketable securities in 2018 on the balance sheets and as marketable securities in 2019 when GHSI went public in April 5, 2019. Prior to January 1, 2018, the Company accounted for the equity securities at cost and only adjusted for other-than-temporary declines in fair value and distributions of earnings. An impairment loss was recognized in the consolidated statements of operations equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment was made. The fair value would then become the new cost basis of investments. Subsequent to the adoption of ASU 2016-01 on January 1, 2018, equity investments, except for those accounted for under the 2016-01 equity method, those that result in consolidation of the investee and certain other investments, are measured at fair value, and any changes in fair value are recognized in earnings. For equity securities without readily determinable fair value and do not qualify for the existing practical expedient in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) to estimate fair value using the net asset value per share (or its equivalent) of the investment, the Company elected to use the measurement alternative to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. Pursuant to ASU 2016-01, for equity investments measured at fair value with changes in fair value recorded in earnings, the Company does not assess whether those securities are impaired. For those equity investments that the Company elects to use the measurement alternative, the Company makes a qualitative assessment of whether the investment is impaired at each reporting date. As of December 31, 2019 and 2020, the investment was accounted at fair value with changes recorded through earnings. Revenue Recognition Revenue is recognized when control of the promised goods or services, through performance obligations by the Company, is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for the performance obligations. The Company recognizes revenue when a sales arrangement with a customer exists, transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The majority of Company revenue originates from contracts with a single performance obligation to deliver products or service. The Company’s performance obligations are satisfied when control of the product is transferred to the customer. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The new revenue standards became effective for the Company on January 1, 2018, and were adopted using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the majority of its revenues continue to be recognized when the customer takes control of its product or services. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to accumulated deficit was required upon adoption. The Company has two reportable segments, which are sales of medical equipment and provision of sleep diagnostic services. The following is a description of principal activities from which the Company generates revenue and related revenue recognition policies: 1. Sale of medical equipment Sale of medical equipment includes both mobile medicine products (sleep apnea diagnostic products) and abdominal CPR Compression The Company distributes medical equipment in China. Control of products sold transfers to customers upon shipment from the Company’s facilities, and the Company’s performance obligations are satisfied at that time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. The Company also provides after-sale services for medical equipment, such as sleep apnea machines and CPR in China. The Company typically sells its branded products with standard 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 evaluates its arrangements with distributors and determines that it is the primary obligor in the sales of distributed products, is subject to inventory risk, has latitude in establishing prices, and assumes credit risk for the amount billed to the customer, or has several but not all of these indicators. In accordance with ASC 606, the Company determines that it is appropriate to record the gross amount of product sales and related costs. As the Company is a principal and it obtains control of the specified goods before they are transferred to the customers, the revenues should be recognized in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods transferred. 2. Provision of sleep diagnostic services Starting from 2018, the Company started to earn service revenue from provision of technical services in relation to detection and analysis of Obstructive Sleep Apnea Syndrome (“OSAS”). The Company is focused on the promotion of sleep respiratory solutions and service in public hospitals. Its wearable sleep diagnostic products and cloud-based service are also available in medical centers of Chinese private preventive healthcare companies in China. Revenue is recognized when the Company’s diagnostic services are provided to the user at medical centers and public hospitals. In the PRC, value added tax (“VAT”) of 13% and 6% of the invoice amount is collected in respect of the sales of goods and service rendered, respectively, 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, other expenses associated with the assembly and distribution of products and depreciation of fixed assets in the provision of services. Selling Expenses Selling expenses consist primarily of salaries and related expenses for personnel engaged in sales, marketing and customer support functions, and costs associated with advertising and other marketing activities, and depreciation expenses related to equipment used for sales and marketing activities. General and Administrative Expenses General and administrative expenses primarily consist of salaries and benefits and related costs for our administrative personnel and management, stock-based compensation, fees and expenses of our outside advisers, including legal, audit and register expenses, expenses associated with our administrative offices, and the depreciation of equipment used for administrative purposes. Advertising Expenses Advertising expenses are expensed as incurred. For the years ended December 31, 2020, 2019 and 2018, advertising and promotional expenses recognized in the consolidated statements of comprehensive loss were $27,908, $19,811 and $56,259, respectively. Warranty The Company typically sells its branded products with standard 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 and records warranty expenses in the selling expenses. 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 material usage or service delivery costs differ from the Company’s estimates, the Company may reverse warranty liability at warranty expiry date. Recovery gain from warranty expense accrued for the years ended December 31, 2020, 2019 and 2018 was $728, $7,911 and $10,261, 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 were $0, $0 and $301,713 for the years ended December 31, 2020, 2019 and 2018, 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, 2020, 2019 and 2018, government subsidies with no further conditions to be met of $447, $0 and $0, respectively, were recorded. Leases Leases where substantially all the rewards and risk of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statement of operations on a straight-line basis over the shorter of the lease term or estimated economic life of the leased property. All of the Company’s leases were short term (less than 12 months) and the Company elected the practical expedient not to record right of use of assets for short term leases. Loss per Share The Company follows the provisions of ASC 260-10, “Earnings per Share”. The Company has been authorized to issue Class A and Class B common stock. The two classes of common stock are substantially identical in all material respects, except for voting rights. Since the Company did not declare any dividends during the years ended December 31, 2020 and 2019, the net loss per common share attributable to each class is the same under the “two-class” method. As such, the two classes of common stock have been presented on a combined basis in the consolidated statements of operations and comprehensive income and in the above computation of net income per common share. Diluted loss per share reflects 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 loss per share. Value Added Tax The Company reports revenues, net of PRC’s value added tax, for all the periods presented in the consolidated statements of income and comprehensive income. 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 zero based on the Company’s current and expected dividend policy. Share-based compensation expenses for stock-based share-based compensation awards granted to non-employees are measured at fair value at the earlier of the performance commitment date or the date service is completed, and recognized over the period during which the service is provided. The Company applies the guidance in ASC 718 to measure share options and restricted shares granted to non-employees based on the then-current fair value at each reporting date. Comprehensive income (loss) Comprehensive income (loss) is comprised of net loss and foreign exchange translation gain (loss). For the Company, comprehensive income for the years ended December 31, 2020, 2019 and 2018 included cumulative foreign currency translation adjustments. Segment Information The Company’s segments are business units that offer different products and services and are reviewed separately by the chief operating decision maker (the “CODM”), in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Company’s Chief Executive Officer. During 2018, the Company started to earn service revenue from provision of technical services in relation to diagnosis of Obstructive Sleep Apnea Syndrome (“OSAS”). The Company is focused on the promotion of sleep respiratory solutions and service in public hospitals. Its wearable sleep diagnostic products and cloud-based service are also available in medical centers of Chinese private preventive healthcare companies in China. We have two reportable segments: sale of medical equipment and provision of OSAS during 2020, 2019 and 2018. For the Years Ended December 31, 2020 2019 2018 Revenues Sale of medical equipment Abdominal CPR Compression 301,549 58,750 221,414 Mobile Medicine (sleep apnea diagnostic products) $ 21,776 $ 153,644 $ 120,930 Provision of OSAS diagnostic services 35,211 171,064 217,042 Total net revenues 358,536 383,458 559,386 Cost of revenue Sale of medical equipment (275,465 ) (112,942 ) (464,918 ) Provision of OSAS diagnostic services (371,188 ) (630,802 ) (292,983 ) (646,653 ) (743,744 ) (757,901 ) Gross loss Sale of medical equipment 47,860 99,452 (122,574 ) Provision of OSAS diagnostic services (335,977 ) (459,738 ) (75,941 ) (288,117 ) (360,286 ) (198,515 ) Depreciation and amortization expense: Sale of medical equipment $ 7,006 $ 84,371 $ 535,800 Provision of OSAS diagnostic services 444,878 693,746 291,830 $ 451,884 $ 778,117 $ 827,630 Capital expenditure Sale of medical equipment $ - $ - $ 16,137 Provision of OSAS diagnostic services - - 760,191 $ - $ - $ 776,328 The total assets for the two reportable segments were shared and indistinguishable for reporting purposes. Concentrations of credit, economic, political risks and exchange risks The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operation in the PRC is subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances aboard, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, restricted cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the PRC and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts. A portion of the Company’s sales are credit sales which are primarily to customers whose abilities to pay are dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables are limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. The Company cannot guarantee that the current exchange rate will remain steady. Therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and yet, because of a fluctuating exchange rates, record higher or lower profit depending on exchange rate of PRC Renminbi (RMB) converted to U.S. dollars on the relevant dates. The exchange rate could fluctuate depending on changes in the political and economic environment without notice. 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 reserve 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, 2020, 2019 and 2018, the Company did not incur any interest or penalties. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”, which will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The standard did not have a material impact on our consolidated finan |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | 4. ACCOUNTS RECEIVABLE, NET Accounts receivable as of December 31, 2020 and 2019 consist of the following: 2020 2019 Accounts receivable $ 43,935 $ 98,195 Less: reserve for doubtful accounts (38,995 ) (36,416 ) Accounts receivable, net $ 4,940 $ 61,779 During the year ended December 31, 2020, bad debt expense was $30,572, recovery of bad debt was 27,993 due to the disposal of Beijing Dehaier and during 2019 and 2018, bad debt expense was $10,148 and $5,826 respectively. |
Other Receivables and Prepaymen
Other Receivables and Prepayments, Net | 12 Months Ended |
Dec. 31, 2020 | |
Other Receivables And Prepayments Net [Abstract] | |
OTHER RECEIVABLES AND PREPAYMENTS, NET | 5. OTHER RECEIVABLES AND PREPAYMENTS, NET Other receivables and prepayments as of December 31, 2020 and 2019 consist of the following: 2020 2019 Rental deposits $ - $ 36,846 Prepaid expenses 74,500 29,939 Interest receivable 16,130 - Advances to employees 83 78 90,713 66,863 Less: reserves for doubtful accounts (56,771 ) (47,996 ) Other receivables and prepayment, net $ 33,942 $ 18,867 During the years ended December 31, 2020, bad debt expense was $26,688, recovery of bad debt was 17,913 due to the disposition of Beijing Dehaier. In 2019 and 2018, bad debts on other receivables were $499 and $16,403, respectively. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 6. INVENTORIES Inventories as of December 31, 2020 and 2019 consist of the following: 2020 2019 Raw materials $ - $ 25,985 Work in progress - 779 Finished goods 147,533 1,060,615 Total inventories $ 147,533 $ 1,087,379 Less: inventory impairment loss (58,930 ) (2,363 ) Inventories, net 88,603 1,085,016 During the years ended December 31, 2020, 2019 and 2018, write-downs of inventories to lower of cost or net realizable value of $58,930, $2,363 and $0, respectively, were charged to costs of revenue in relation to the Company’s operations. Subsequent sale of impaired inventory items is recorded as credits to inventory write-downs previously recorded. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 7. PROPERTY AND EQUIPMENT, NET Property and equipment as of December 31, 2020 and 2019 consist of the following: 2020 2019 Plant and machinery $ 1,413,088 $ 1,915,160 Automobiles - 137,367 Office and computer equipment 17,343 22,689 Total property and equipment 1,430,431 2,075,216 Less: Accumulated depreciation (1,354,778 ) (1,418,376 ) Property and equipment, net $ 75,653 $ 656,840 Depreciation from the Company’s operations were $451,884, $778,117 and $467,929 for the years ended December 31, 2020, 2019, and 2018 respectively. The Company did not record any impairment on its property and equipment for the years ended December 31, 2020, 2019 and 2018. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS, NET | 8. INTANGIBLE ASSETS, NET Intangible assets as of December 31, 2020 and 2019 were $nil and $nil, respectively. Amortization expense from the Company’s continuing operations was $0, $0 and $359,701 for the years ended December 31, 2020, 2019, and 2018, respectively. The Company recorded impairment on its intangible assets from its continuing operations $0, $0 and $3,281,779 for the years ended December 31, 2020, 2019 and 2018, respectively. During the year ended December 31, 2018, as a result of lower-than-expected revenue performance of the Company, management determined not to further update and maintain its software copyright and patent for the therapy products of sleep respiratory business. The unamortized software copyright and patent and others of $3,281,779 were fully impaired. |
Equity Securities
Equity Securities | 12 Months Ended |
Dec. 31, 2020 | |
Debt Securities, Available-for-sale [Abstract] | |
EQUITY SECURITIES | 9. EQUITY SECURITIES 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. (“GHSI” or the “Seller”), at a purchase price of $1.15 per Share (or a purchase price of $1.5 million in the aggregate) in a private placement (the “Private Placement”). The Private Placement occurred 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 $5.0 million. The investments account for less five percent of GHSI’s total shares. Prior to January 1, 2018, the Company accounted for the equity securities at cost and only adjusted for other-than-temporary declines in fair value and distributions of earnings. As of December 31, 2018, under ASU 2016-01 the Company elected to measure this equity investment using the measurement alternative, which requires that the investment is measured at cost, less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. For the year ended December 31, 2018 the investment was not impaired and there were no observable price changes. On January 30, 2019, GHSI effectuated a one-for-two (1:2) reverse stock split of its common stock without any change to its par value. On April 9, 2019, GHSI closed its initial public offering of 1,250,000 shares of its common stock at a public offering price of $4.00 per share for total gross proceeds of $5.0 million, before deducting underwriting discounts and commissions and other offering costs and expenses payable by it. GHSI’s shares began trading on the Nasdaq Capital Market on April 5, 2019 under the symbol “GHSI”. The Company accounted for the equity securities as marketable securities as of December 31, 2020. The share price of GHSI at December 31, 2020 is $0.42 per share, based on which the Company re-valued its equity securities in GHSI and recognized the fair value change gain of $130,435 through unrealized income on marketable securities. The share price of GHSI at December 31, 2019 is $0.22 per share, based on which the Company re-valued its equity securities in GHSI and recognized the fair value change of $1,356,565 through unrealized loss on marketable securities. |
Due to Related Parties
Due to Related Parties | 12 Months Ended |
Dec. 31, 2020 | |
Due to Related Parties [Abstract] | |
DUE TO RELATED PARTIES | 10. DUE TO RELATED PARTIES December 31, 2020 2019 Loans from Hangzhou Lianluo Interactive. $ 996,450 $ 931,450 Loans from DGHKT. - 33,000 Loans from Ping Chen 787,608 243,881 Total short-term borrowings 1,784,058 1,208,331 The short-term borrowings are all from related parties. See Note 19. Interest expense on short-term borrowings amounted to $0, $0 and $200,799 for the years ended December 31, 2020, 2019 and 2018, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Payables And Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Other payables and other current liabilities as of December 31, 2020 and 2019 consist of the following: 2020 2019 Accrued salaries and social welfare $ 382,769 $ 663,929 Accrued expenses 348,023 572,932 Reimbursed employee’s expense 8,174 27,460 Deposits from customers 117,204 253,014 Others 10,164 13,1383 Total accrued expenses and other current liabilities $ 866,334 $ 1,530,473 |
Commitments and Contingency
Commitments and Contingency | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCY | 12. COMMITMENTS AND CONTINGENCY Operating Leases Rent expense for the years ended December 31, 2020, 2019 and 2018 was $57,202, $206,006 and $301,021, respectively. All of Company’s leases were short term (less than 12 months) and the Company elected the practical expedient not to record right of use of assets related to short term leases. 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 either a three-year employment contract renewable on an annual basis or non-fixed term employment contract. Contingency The Company is periodically the subject of various pending or threatened legal actions and claims arising out of its operations in the normal course of business. In the opinion of management of the Company, adequate provision has been made in the Company’s financial statements at December 31, 2020. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
EQUITY | 13. EQUITY Common Shares LLIT is authorized to issue 4,736,111 shares of Class A common stock and 1,513,889 shares of Class B common stock, each with a par value of $0.021848. Each share of Class A common stock is entitled to one vote, and each share of Class B common stock is entitled to ten votes and is convertible at any time into one share of Class A common stock. Shares of Class A common stock and Class B common stock are treated equally, identically and ratably with respect to any dividends declared by the Board of Directors unless the Board of Directors declares different dividends to the Class A common stock and Class B common stock by getting approval from a majority of common stock holders. On April 28, 2016, the Company entered into a definitive securities purchase agreement with Hangzhou Lianluo pursuant to which Hangzhou Lianluo has agreed to purchase 1,388,888 common shares of the Company for an aggregate of $20,000,000. The purchase price is $14.40 per share, which represents a 35% premium to the Company’s closing price of $10.64 on April 27, 2016. In August 2016, the Company closed the securities purchase agreement (the “Securities Purchase Agreement”) with Hangzhou Lianluo and Hangzhou Lianluo completed the purchase of $20 million of the Company’s common shares and warrants to purchase common shares (Note 14). As of December 31, 2016, the Company reported a subscription receivable of $1,492,538 from Hangzhou Lianluo which had been collected on April 13, 2017. On June 8, 2017, the Company held the Annual General Meeting to approve the amend and restate the Company’s amended and restated Memorandum and Articles of Association (the “New M&AAs”) in order that the Company’s authorized share capital be re-classified and re-designated into 6,250,000 Common Shares of par value of $0.021848 each, of which 4,736,111 would be designated as Class A Common Shares of par value of $0.021848 each and 1,513,889 be designated as Class B Common Shares of par value of $0.021848 each. In 2018, the Company issued an aggregate of 34,375 common shares to a consultant under the Company’s incentive plan for advice and services provided concerning the Company’s merger and acquisition planning, development and strategy implementation. The 34,375 common shares were issued in two tranches including 17,187 common shares issued on February 21, 2018 and 17,188 common shares issued on March 5, 2018. The fair value of the 34,375 common shares was $835,999, which was calculated based on the grant date stock price of $25.44 on February 21, 2018 and of $23.20 on March 5, 2018. During the year ended December 31, 2018, the Company amortized $835,999 as consulting expenses. Also in 2018, the Company issued 25,000 common shares to a consulting firm for management consulting and advisory services to be provided for a period of 12 months up to August 15, 2019. The fair value of these shares on the grant date based on the closing price was approximately $288,000. During the year ended December 31, 2019 and 2018, the Company amortized $179,112 and $108,888 as consulting expenses. On February 14, 2020, the Company consummated a registered direct offering of 323,750 Class A Common Shares and a concurrent private placement of warrants to purchase up to 323,750 Class A Common Shares with certain accredited investors. The purchase price per Class A Common Share in the registered direct offering was $6.80. The warrants sold in the concurrent private placement are exercisable for a period of five and one-half years upon issuance, at an initial exercise price of $6.80 per share, which was thereafter adjusted to $4.9912, subject to full ratchet anti-dilution protection. On February 25, 2020, we consummated a second registered direct offering of 437,500 Class A Common Shares and a concurrent private placement of warrants to purchase up to 437,500 Class A Common Shares with the same accredited investors. The purchase price per Class A Common Share in the second registered direct offering was $5.60. The warrants sold in the second concurrent private placement are exercisable for a period of five and one-half years upon issuance, at an initial exercise price of $5.60 per share, subject to anti-dilution protections. On March 2, 2020, we consummated a third registered direct offering of 612,500 Class A Common Shares and a concurrent private placement of warrants to purchase up to 612,500 Class A Common Shares with the same accredited investors. The purchase price per Class A Common Share in this registered direct offering was $5.60 per share. The warrants sold in the third concurrent private placement are exercisable for a period of five and one-half years upon issuance, at an initial exercise price of $5.60 per share, subject to anti-dilution protections. On October 21, 2020, the Company completed a share combination of its common shares at a ratio of one-for-eight, which decreased the Company’s outstanding Class A common shares from 17,685,475 shares to 2,210,683 shares and the Company’s outstanding Class B common shares from 11,111,111 shares to 1,388,888 shares. This share combination also decreased the Company’s authorized shares to 6,250,000 common shares of par value of US$0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares. Accordingly, all share and per share information has been restated to retroactively show the effect of this share combination. At December 31, 2020 and 2019, the number of shares of Class A common stock issued and outstanding was 2,210,683 and 836,933 respectively. At December 31, 2020 and 2019, the number of shares of Class B common stock issued and outstanding was 1,388,888. 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, 2020 and 2019. 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 56,250 options at an exercise price of $11.60 per share. The options vest in equal annual installments over the five years of the agreements ending December 28, 2016. On October 7, 2013, pursuant to the Company’s Share Incentive Plan, the Company granted a non-statutory option to acquire 11,750 of the Company’s common shares at an exercise price of $18.40 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 6, 2018. On August 20, 2014, pursuant to the Company’s Share Incentive Plan, the Company granted additional option to acquire 16,375 of the Company’s common shares at an exercise price of $42.48 per share to Mr. Ping Chen. The options vest in equal annual installments over the five years of the agreement ending August 19, 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 43,625 options at an exercise price of $13.12 per share. The options vest in equal annual installments over the two years of the agreements ending August 6, 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 72,608 options at an exercise price of $15.04 per share. The options vest in equal annual installments over the two years of the agreements ending March 20, 2018. In 2018, 1,375 options were exercised for cash to purchase 1,375 shares of the Company’s common shares for an aggregate consideration of $17,851, and 5,000 options were exercised on a cashless basis to purchase 1,000 common shares of the Company. As of December 31, 2020, all outstanding options have been vested. The Company valued the stock options using the Black-Scholes model with the following assumptions: Expected Expected Dividend Risk Free Grant Date Fair 10 126%-228% 0% 0.73%-1.65% $9.76-$41.20 The following is a summary of the option activity: Stock options Shares Weighted Aggregate intrinsic (1) Outstanding as of January 1, 2019 110,233 $ 18.72 Forfeited (10,875 ) - Exercised Outstanding as of December 31, 2019 99,358 $ 19.20 Forfeited (33,000 ) Exercised - Outstanding as of December 31, 2020 66,358 $ 21.82 $ - (1) The intrinsic value of the stock options at December 31, 2020 is the amount by which the market value of the Company’s common stock of $4.15 as of December 31, 2020 exceeds the exercise price of the options. Following is a summary of the status of options outstanding and exercisable at December 31, 2020: Outstanding options Exercisable options Average Number Average Average Number Average $ 11.60 11,250 1.00 $ 11.60 11,250 1.00 $ 18.40 11,750 2.77 $ 18.40 11,750 2.77 $ 42.48 16,375 3.64 $ 42.48 16,375 3.64 $ 15.04 26,983 5.22 $ 15.04 26,983 5.22 66,358 66,358 For the years ended December 31, 2020, 2019 and 2018, the Company recognized $0, $69,176 and $247,134 respectively, as compensation expense under its stock option plan. As of December 31, 2020, unrecognized share-based compensation expense related to options was nil. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2020 | |
Warrants [Abstract] | |
WARRANTS | 14. WARRANTS On April 28, 2016, the Company signed Share Purchase Agreement (“SPA”) with Hangzhou Lianluo. In this SPA, Hangzhou Lianluo is entitled with 125,000 warrants to acquire from the Company 125,000 common shares at purchase price of $17.60 per share. The warrants will be exercisable at any time. The Company recognized the warrants as a derivative liability because warrants can be settled in cash. Warrants are remeasured at fair value with changes in fair value recorded in earnings in each reporting period. There was a total of 125,000 warrants issued and outstanding as of December 31, 2020 and 2019. The fair value of the outstanding warrants was calculated using the Black Scholes Model with the following assumptions: December 31, 2020 2019 2018 Market price per share (USD/share) $ 4.15 $ 3.12 9.04 Exercise price (USD/share) 17.60 17.60 17.60 Risk free rate 0.41 % 1.81 % 2.60 % Dividend yield 0 % 0 % 0 % Expected term/Contractual life (years) 5.3 6.3 7.3 Expected volatility 341.88 % 279.93 % 256.20 % 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, 2020 2019 2018- Beginning balance $ 389,630 $ 1,129,246 $ 1,729,111 Warrants issued to Hangzhou Lianluo - - - Warrants redeemed - - - Fair value change of the issued warrants included in earnings 129,036 (739,616 ) (599,865 ) Ending balance $ 518,666 $ 389,630 1,129,246 The following is a summary of the warrants activity: Number Weighted Weighted Outstanding as of January 1, 2019 125,000 $ 17.60 Granted - Forfeited - Exercised - Redeemed - Outstanding as of December 31, 2019 125,000 $ 17.60 Granted - Forfeited - Exercised - Redeemed - Outstanding as of December 31, 2020 125,000 $ 17.60 From February to March 2020, the Company consummated three registered direct offerings of 1,373,750 Class A Common Shares and concurrent private placements of warrants to purchase up to 1,373,750 Class A Common Shares with three investors. In late January 2021, 1,255,000 of these warrants were exercised and leaving 118,750 warrants that remain outstanding. Amount of Underlying Class A Common Shares 118,750 Exercise price $ 5.60 Floor Price $ 1.44 Expiration Date September 2, 2025 Issuance Date March 2, 2020 In accordance with ASC 815-40, the Company accounted for the Warrants as equity instruments. |
Selling Expenses
Selling Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Selling Expenses [Abstract] | |
SELLING EXPENSES | 15. SELLING EXPENSES The Company’s selling expenses consist of the followings: Year ended December 31, 2020 2019 2018 Salaries and social welfare $ 58,915 $ 761,774 $ 1,765,019 Travelling expenses 1,256 34,244 170,931 Service fee - 12,369 41,437 Advertising & promotion 27,908 19,811 56,259 Entertainment fee 3,377 4,848 42,656 Office expense - - 1,960 Others 364 2,224 4,567 Total Selling expenses $ 91,820 $ 835,270 $ 2,082,829 |
General and Administrative Expe
General and Administrative Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Selling, General and Administrative Expense [Abstract] | |
GENERAL AND ADMINISTRATIVE EXPENSES | 16. GENERAL AND ADMINISTRATIVE EXPENSES The Company’s general and administrative expenses consist of the followings: Year ended December 31, 2020 2019 2018 Salaries and social welfare $ 787,700 $ 1,358,629 $ 1,068,643 Service fee 1,469,810 750,734 1,493,403 Office expense 79,733 268,555 391,850 Research & Development - - 301,713 Depreciation &Amortization 83,531 138,811 79,177 Stock compensation - 69,176 247,134 Entertainment fee 3,348 4,176 22,593 Travel Expense 57,237 1,056 17,902 Others 842 2,671 53,050 Total General and administrative expenses $ 2,482,201 $ 2,593,808 $ 3,675,465 |
Loss per Share
Loss per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings 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, 2020, 2019 and 2018: Year ended December 31, 2020 2019 2018 Net loss attributable to the Company’s common shareholders $ (3,241,697 ) $ (4,450,994 ) $ (8,910,002 ) Weighted average shares outstanding – Basic and diluted 3,389,069 2,225,821 2,202,176 Loss per share – Basic and diluted $ (0.96 ) $ (2.00 ) $ (4.05 ) The Company has been authorized to issue Class A and Class B common stock. The two classes of common stock are substantially identical in all material respects, except for voting rights. Since the Company did not declare any dividends during the years ended December 31, 2020 and 2019, the net loss per common share attributable to each class is the same under the “two-class” method. As such, the two classes of common stock have been presented on a combined basis in the consolidated statements of operations and comprehensive income and in the above computation of net loss per common share. For the years ended December 31, 2020, 2019 and 2018, all the outstanding warrants and options were anti-dilutive. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 18. INCOME TAXES British Virgin Islands Lianluo Smart is a tax-exempt company incorporated in the British Virgin Islands. 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. The tax rate for Lianluo Connection is 25%. The BVI and PRC components of loss before income taxes consisted of the following: Years Ended December 31, 2020 2019 2018 BVI $ (1,650,230 ) $ (1,385,394 ) $ (957,973 ) PRC (1,591,467 ) (3,065,600 ) (7,952,029 ) Loss before income taxes $ (3,241,697 ) $ (4,450,994 ) $ (8,910,002 ) The income taxes (benefit) provision for the years presented is as follows: Years Ended December 31, 2020 2019 2018 Current: BVI $ - $ - $ - PRC - - - - - - Deferred: BVI - - - PRC - - - Income taxes (benefit) provision $ - $ - $ - 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, 2020 2019 2018 Loss before provision for income tax and non-controlling interests $ (3,241,697 ) $ (4,450,994 ) $ (8,910,002 ) PRC corporate income tax rate 25 % 25 % 25 % Income tax benefit computed at PRC statutory corporate income tax rate (810,424 ) (1,112,749 ) (2,227,500 ) Reconciling items: Allowances and reserves 26,352 20,414 4,940 Impairment on intangible assets - - 818,935 BVI tax rate and PRC tax law differential 412,557 346,349 239,493 Others 5,301 40,828 300 Valuation allowance on deferred tax assets 366,214 705,158 1,163,832 Income tax benefit $ - $ - $ - 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, 2020 and 2019 are presented below: 2020 2019 Deferred tax assets Allowances and reserves $ 181,706 $ 155,354 Impairment on intangible assets - 818,935 Net operating loss carried forward 2,418,846 3,789,703 Valuation reserve (2,600,552 ) (4,763,992 ) Deferred tax assets, non-current $ - $ - As of December 31, 2020, the Company’s PRC subsidiaries had net operating loss carry forwards of $9,675,383, which will expire in various years through year 2025. 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 reserve was provided against the full amount of the potential tax benefits. Uncertain tax position The accounting for uncertain tax positions prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is required to recognize in the financial statements the impact of a tax position, if that position is more-likely than-not of being sustained on audit, based on the technical merits of the position. The Company recorded a net charge for unrecognized tax benefits in 2020 and 2019 of $0 and $0, respectively. The Company includes interest and penalties related to unrecognized tax benefits, if any, within the benefit from (provision for) income taxes. The Company only files income tax returns in PRC. 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, 2020 | |
Related Party Transactions [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) During the years ended December 31, 2020, 2019 and 2018, the Company purchased from Hangzhou Lianluo, its controlling shareholder, and subsidiary of Hangzhou Lianluo for services in amounts of $44,614, $42,000 and $204, respectively. As of December 31, 2020, the Company reported $3,019 in service charge payable to Hangzhou Lianluo’s subsidiary. On January 19, 2021, this balance was fully paid. (2) During the years ended December 31, 2020, 2019 and 2018, the Company sold equipment of $nil, $9,588 and $nil, respectively, to a related party company in which its previous CEO, Mr. Ping Chen holds 51% ownership. As of December 31, 2020, the Company reported an outstanding receivable of $11,455 due from the related party company. (3) On July 1, 2018, the Company leased office premises from Hangzhou Lianluo for a period of 1 year, with an annual rental of $84,447 (RMB580,788). Rental payments charged as expenses in 2020, 2019 and 2018 were $0, $35,892 and $39,942, respectively. As of December 31, 2020, the Company reported an outstanding rental payable of $81,126 to Hangzhou Lianluo. (4) Short-term borrowing from related party companies: i) Borrowings from Hangzhou Lianluo During the fiscal year 2019, the Company borrowed an aggregate of $942,500 from Hangzhou Lianluo and repaid $0. As of December 31, 2020, the loan balances were $996,450. These loans were extended, interest-free as of December 31, 2020 and without specific repayment date, which is based upon both parties’ agreement. During 2018, the Company borrowed from Hangzhou Lianluo $3,682,592 carrying an annual interest rate of 5%-8%, which was fully settled through a debt offset agreement among the Company, Hangzhou Lianluo and DGHKT as described below “iv) Borrowings to DGHKT.” As of December 31, 2018, the loan balance was zero. ii) Borrowings from DGHKT During 2019, the Company borrowed $33,000 interest free from DGHKT, and repaid $0. On July 14, 2020, the Company repaid the principal of $33,000 to DGHKT. As of December 31, 2020, the loan balance was zero. iii) Borrowings from Mr. Ping Chen: Starting from 2019, the Company borrowed from Mr. Ping Chen, its former CEO, free of interest to fund its operation. During 2020, 2019 and 2018, the borrowings were $498,191, $387,182 and nil, and Mr. Ping Chen forgave a debt of $143,301 of the borrowings in 2019. The balances were $787,608, $243,881 and nil as of December 31, 2020, 2019 and 2018, respectively. iv) Loans to DGHKT On March 15, 2018, the Company entered into a loan agreement with DGHKT (an affiliate of Hangzhou Lianluo), pursuant to which the Company loaned $6 million to DGHK for a term of 12 months. The Company also borrowed RMB34.3 million (approximately $5.2 million) from Hangzhou Lianluo, its principal shareholder. Pursuant to an agreement dated December 27, 2018, the Company, DGHKT, Hangzhou Lianluo agreed that the outstanding amount owed by DGHKT to the Company of RMB35.6 million be repaid by Hangzhou Lianluo on behalf of DGHKT, to the Company. This repayment is agreed to be settled in the form of offset against the amount owed by the Company to Hangzhou Lianluo of RMB35.6 million (approximately $5.2 million). As a result, the Company no longer owed or was owed by Hangzhou Lianluo or DGHKT any amount as of December 31, 2018. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | 20. CONCENTRATIONS Major Customers For the year ended December 31, 2020, two customers accounted for approximately 84% and 7%, respectively, of the Company’s revenues. For the year ended December 31, 2019, two customers accounted for approximately 21% and 15%, respectively, of the Company’s revenues. For the year ended December 31, 2018, two customers accounted for approximately 16% and 13%, respectively, of the Company’s revenues. Major Suppliers For the year ended December 31, 2020 and 2019, one supplier accounted for 100% of the Company’s purchases. For the year ended December 31, 2018, two suppliers accounted for approximately 31% and 17%, respectively, of the Company’s purchases. Disaggregation of Revenue from Contracts with Customers The following represents the revenues by products, all derived from China: For the years ended December 31, 2020 2019 2018 Sale of medical equipment Abdominal CPR Compression $ 301,549 $ 58,750 $ 221,414 Mobile Medicine (sleep apnea diagnostic products) 21,776 153,644 120,930 OSAS service (analysis and detection) 35,211 171,064 217,042 Total Revenues $ 358,536 $ 383,458 $ 559,386 |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Loss Contingency [Abstract] | |
CONTINGENCIES | 21. CONTINGENCIES On October 23, 2020, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Lightning Delaware Sub, Inc., its wholly owned subsidiary (“Merger Sub”), and Newegg Inc., a Delaware corporation (“Newegg”), whereby Merger Sub will merge with and into Newegg, with Newegg continuing as the surviving corporation and a wholly owned subsidiary of the Company (the “Merger”). Under the Merger Agreement, at the effective time of the Merger, each share of the capital stock of Newegg issued and outstanding immediately prior to the effective time of Merger (other than treasury shares and any shares of Newegg capital stock held directly by us or Merger Sub) will be converted into the right to receive 5.8417 common shares of the Company and, if applicable, cash in lieu of fractional shares. The closing of the Merger is subject to customary conditions, including regulatory approval and approval by our shareholders. If the Merger are not consummated for these or any other reasons, the Company may be required under certain circumstances to pay Newegg a termination fee of $450,000; On October 26, 2020, the Company filed the Form F-4 with the SEC to seek its shareholders’ approval of the Restructure as well as other related proposals including the elimination of its dual class share structure, an increase of the authorized shares, share combination, name change, and amendment of our memorandum and articles of association. Once the Form F-4 has been declared effective by the SEC, the Company intends to set a date for a special meeting for our shareholders to approve the proposals associated with the Merger. On October 23, 2020, the Company also entered into an equity transfer agreement (the “Disposition Agreement”) with Beijing Fenjin Times Technology Development Co., Ltd. (“Beijing Fenjin”) and its wholly owned subsidiary, Lianluo Connection, pursuant to which Beijing Fenjin will acquire 100% of the equity interests in Lianluo Connection for RMB0 immediately following completion of the Merger. In exchange for all of the equity interests in Lianluo Connection, Beijing Fenjin agreed to contribute RMB87.784 million to Lianluo Connection’s registered capital by September 23, 2023 in accordance with the articles of association of Lianluo Connection. In addition, as an inducement for Beijing Fenjin entering into the Disposition Agreement, the Company agreed to convert the indebtedness in the aggregate amount of $11,255,188.47 that Lianluo Connection owes to the Company into additional paid-in capital of Lianluo Connection immediately prior to the closing of the disposition. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 22. SUBSEQUENT EVENTS Exercise of warrants As a result of the private placements that closed on February 14, 2020, February 25, 2020, and March 2, 2020, the Company issued to several investors warrants to purchase 1,373,750 of the Company’s Class A common shares. In late January 2021, 1,255,000 of these warrants were exercised resulting in aggregate cash proceeds to the Company of $6.8 million and leaving 118,750 warrants that remain outstanding. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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. All inter-company transactions and balances are eliminated in consolidation. |
Share Combination | Share Combination On October 21, 2020, the Company completed a share combination of its common shares at a ratio of one-for-eight, which decreased the Company’s outstanding Class A common shares from 17,685,475 shares to 2,210,683 shares and the Company’s outstanding Class B common shares from 11,111,111 shares to 1,388,888 shares. This share combination also decreased the Company’s authorized shares to 6,250,000 common shares of par value of US$0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares. Accordingly, all share and per share information has been restated to retroactively show the effect of this share combination. |
Foreign currency translation and transactions | Foreign currency translation and transactions The functional currency of Lianluo Smart Limited is United States dollars (“US$” or “$”). The functional currency of Lianluo Connection is Renminbi (“RMB”), and PRC is the primary economic environment in which the Company operates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net income for the respective periods. The financial statements of the Company’s foreign operations are translated into US$ in accordance with ASC 830-10, “Foreign Currency Matters”. For financial reporting purposes, the financial statements of the Company’s PRC subsidiary are prepared using RMB are translated into Company’s reporting currency, the US$. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and Shareholders’ equity is translated at historical exchange rates except for the change in retained earnings during the year which is the result of the income. The cumulative translation adjustments are recorded in accumulated other comprehensive income in the accompanying consolidated statements of shareholders’ equity. The exchange rates applied are as follows: December 31, December 31, RMB to US$ exchange rate at balance sheets dates, 6.5249 6.9762 Year Ended December 31, 2020 2019 2018 Average RMB to US$ exchange rate for each year 6.8976 6.8985 6.6090 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. The source of the exchange rates is generated from People’s Bank of China. |
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, reserve for doubtful accounts, valuation of inventories, impairment testing of long-term assets, standard warranty obligation, warrants liability, stock-based compensation, recoverability of intangible assets, 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 in the PRC. |
Restricted Cash | Restricted Cash As of December 31, 2020, restricted cash of $3.5 million represents the cash balance placed into a U.S. bank account designated by a third-party escrow agent mutually selected by the Company and Newegg. The cash can only be used by the Company and Newegg to (i) defend, indemnify and hold harmless the Parties and each of their respective Affiliates and Representatives against, and satisfy any Liabilities relating to, any Actions relating to the Securities Purchase Agreements dated February 12, 2020, February 21, 2020 and February 27, 2020 between LLIT, Sabby Volatility Warrant Master Fund, Ltd., Intracoastal Capital LLC, and Anson Investments Master Fund LP or the Class A Common Share Purchase Warrants issued on February 14, 2020, February 25, 2020, and March 2, 2020, in each case as amended or restated and (ii) pay the amount of any fee that is payable from the Company to Newegg pursuant to the Merger Agreement. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for expected losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowance when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balance, the Company considers many factors, including historical experience, current conditions, and reasonable and supportable forecasts. Accounts are written off after exhaustive efforts at collection. Accounts receivable terms typically are net 60-180 days from when the services were provided, or when goods were delivered. At December 31, 2020 and 2019, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $38,995 and $36,416, respectively. |
Other Receivables and Prepayments, net | Other Receivables and Prepayments, net Other receivables and prepayments primarily include advances to employees, short-term loan and deposits to landlords and service providers. Management regularly reviews aging of receivables and prepayments 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 a 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. 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 Company’s carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments are a reasonable estimate of their fair values because carrying value of cash and cash equivalents, accounts receivable, accounts payable, other payables and accrued liabilities approximate fair value because of the short-term nature of these items. The estimated fair values of short-term related party borrowings were not materially different from their carrying value as presented due to the short maturities. As the carrying amounts are reasonable estimates of the fair value, these financial instruments are classified within Level 1 of the fair value hierarchy. 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 marketable equity securities are accounted at fair value, with changes in fair value recorded through earnings. The fair value of marketable equity securities was determined using the quote price in the active market, with Level 1 inputs (Note 9). The fair value of warrants was determined using the Black Scholes Model, with level 3 inputs (Note 14). |
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 has 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 (Note 14). |
Inventories | Inventories Inventories include finished goods relating to medical devices. Inventories are stated at the lower of cost or net realizable value. Cost is determined on a weighted-average basis. Management compares the cost of inventories with the net realizable value and writes down inventories to net realizable value, if lower. Net realizable value is based on estimated selling prices in the ordinary course of business less cost to sell. These estimates are based on the current market and economic condition and the historical experience of selling products of similar nature. Management of the Company reassesses the estimations at the end of each reporting period. |
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: Leasehold improvements Shorter of the useful lives or the lease term Machinery and equipment 2 - 3 years Furniture and office equipment 3 - 5 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 Patent rights 10 years Other software 5 years |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be fully 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 undiscounted 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 determined that, for the years ended December 31, 2020, 2019 and 2018, impairment loss for intangible assets was $nil, $nil and $3,281,779, respectively. |
Equity securities | Equity securities The Company’s equity securities represent equity investments in Guardion Health Sciences, Inc. (“GHSI”) made in November 2017. The Company holds less than 5% of the GHSI’s total shares. Details see Note 9. The equity securities were accounted for as non-marketable securities in 2018 on the balance sheets and as marketable securities in 2019 when GHSI went public in April 5, 2019. Prior to January 1, 2018, the Company accounted for the equity securities at cost and only adjusted for other-than-temporary declines in fair value and distributions of earnings. An impairment loss was recognized in the consolidated statements of operations equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment was made. The fair value would then become the new cost basis of investments. Subsequent to the adoption of ASU 2016-01 on January 1, 2018, equity investments, except for those accounted for under the 2016-01 equity method, those that result in consolidation of the investee and certain other investments, are measured at fair value, and any changes in fair value are recognized in earnings. For equity securities without readily determinable fair value and do not qualify for the existing practical expedient in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) to estimate fair value using the net asset value per share (or its equivalent) of the investment, the Company elected to use the measurement alternative to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. Pursuant to ASU 2016-01, for equity investments measured at fair value with changes in fair value recorded in earnings, the Company does not assess whether those securities are impaired. For those equity investments that the Company elects to use the measurement alternative, the Company makes a qualitative assessment of whether the investment is impaired at each reporting date. As of December 31, 2019 and 2020, the investment was accounted at fair value with changes recorded through earnings. |
Revenue Recognition | Revenue Recognition Revenue is recognized when control of the promised goods or services, through performance obligations by the Company, is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for the performance obligations. The Company recognizes revenue when a sales arrangement with a customer exists, transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The majority of Company revenue originates from contracts with a single performance obligation to deliver products or service. The Company’s performance obligations are satisfied when control of the product is transferred to the customer. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The new revenue standards became effective for the Company on January 1, 2018, and were adopted using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the majority of its revenues continue to be recognized when the customer takes control of its product or services. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to accumulated deficit was required upon adoption. The Company has two reportable segments, which are sales of medical equipment and provision of sleep diagnostic services. The following is a description of principal activities from which the Company generates revenue and related revenue recognition policies: 1. Sale of medical equipment Sale of medical equipment includes both mobile medicine products (sleep apnea diagnostic products) and abdominal CPR Compression The Company distributes medical equipment in China. Control of products sold transfers to customers upon shipment from the Company’s facilities, and the Company’s performance obligations are satisfied at that time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. The Company also provides after-sale services for medical equipment, such as sleep apnea machines and CPR in China. The Company typically sells its branded products with standard 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 evaluates its arrangements with distributors and determines that it is the primary obligor in the sales of distributed products, is subject to inventory risk, has latitude in establishing prices, and assumes credit risk for the amount billed to the customer, or has several but not all of these indicators. In accordance with ASC 606, the Company determines that it is appropriate to record the gross amount of product sales and related costs. As the Company is a principal and it obtains control of the specified goods before they are transferred to the customers, the revenues should be recognized in the gross amount of consideration to which it expects to be entitled in exchange for the specified goods transferred. 2. Provision of sleep diagnostic services Starting from 2018, the Company started to earn service revenue from provision of technical services in relation to detection and analysis of Obstructive Sleep Apnea Syndrome (“OSAS”). The Company is focused on the promotion of sleep respiratory solutions and service in public hospitals. Its wearable sleep diagnostic products and cloud-based service are also available in medical centers of Chinese private preventive healthcare companies in China. Revenue is recognized when the Company’s diagnostic services are provided to the user at medical centers and public hospitals. In the PRC, value added tax (“VAT”) of 13% and 6% of the invoice amount is collected in respect of the sales of goods and service rendered, respectively, 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, other expenses associated with the assembly and distribution of products and depreciation of fixed assets in the provision of services. Selling Expenses Selling expenses consist primarily of salaries and related expenses for personnel engaged in sales, marketing and customer support functions, and costs associated with advertising and other marketing activities, and depreciation expenses related to equipment used for sales and marketing activities. General and Administrative Expenses General and administrative expenses primarily consist of salaries and benefits and related costs for our administrative personnel and management, stock-based compensation, fees and expenses of our outside advisers, including legal, audit and register expenses, expenses associated with our administrative offices, and the depreciation of equipment used for administrative purposes. |
Advertising Expenses | Advertising Expenses Advertising expenses are expensed as incurred. For the years ended December 31, 2020, 2019 and 2018, advertising and promotional expenses recognized in the consolidated statements of comprehensive loss were $27,908, $19,811 and $56,259, respectively. |
Warranty | Warranty The Company typically sells its branded products with standard 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 and records warranty expenses in the selling expenses. 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 material usage or service delivery costs differ from the Company’s estimates, the Company may reverse warranty liability at warranty expiry date. Recovery gain from warranty expense accrued for the years ended December 31, 2020, 2019 and 2018 was $728, $7,911 and $10,261, 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 were $0, $0 and $301,713 for the years ended December 31, 2020, 2019 and 2018, 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, 2020, 2019 and 2018, government subsidies with no further conditions to be met of $447, $0 and $0, respectively, were recorded. |
Leases | Leases Leases where substantially all the rewards and risk of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statement of operations on a straight-line basis over the shorter of the lease term or estimated economic life of the leased property. All of the Company’s leases were short term (less than 12 months) and the Company elected the practical expedient not to record right of use of assets for short term leases. |
Loss per Share | Loss per Share The Company follows the provisions of ASC 260-10, “Earnings per Share”. The Company has been authorized to issue Class A and Class B common stock. The two classes of common stock are substantially identical in all material respects, except for voting rights. Since the Company did not declare any dividends during the years ended December 31, 2020 and 2019, the net loss per common share attributable to each class is the same under the “two-class” method. As such, the two classes of common stock have been presented on a combined basis in the consolidated statements of operations and comprehensive income and in the above computation of net income per common share. Diluted loss per share reflects 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 loss per share. |
Value Added Tax | Value Added Tax The Company reports revenues, net of PRC’s value added tax, for all the periods presented in the consolidated statements of income and comprehensive income. |
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 zero based on the Company’s current and expected dividend policy. Share-based compensation expenses for stock-based share-based compensation awards granted to non-employees are measured at fair value at the earlier of the performance commitment date or the date service is completed, and recognized over the period during which the service is provided. The Company applies the guidance in ASC 718 to measure share options and restricted shares granted to non-employees based on the then-current fair value at each reporting date. |
Comprehensive income (loss) | Comprehensive income (loss) Comprehensive income (loss) is comprised of net loss and foreign exchange translation gain (loss). For the Company, comprehensive income for the years ended December 31, 2020, 2019 and 2018 included cumulative foreign currency translation adjustments. |
Segment Information | Segment Information The Company’s segments are business units that offer different products and services and are reviewed separately by the chief operating decision maker (the “CODM”), in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Company’s Chief Executive Officer. During 2018, the Company started to earn service revenue from provision of technical services in relation to diagnosis of Obstructive Sleep Apnea Syndrome (“OSAS”). The Company is focused on the promotion of sleep respiratory solutions and service in public hospitals. Its wearable sleep diagnostic products and cloud-based service are also available in medical centers of Chinese private preventive healthcare companies in China. We have two reportable segments: sale of medical equipment and provision of OSAS during 2020, 2019 and 2018. For the Years Ended December 31, 2020 2019 2018 Revenues Sale of medical equipment Abdominal CPR Compression 301,549 58,750 221,414 Mobile Medicine (sleep apnea diagnostic products) $ 21,776 $ 153,644 $ 120,930 Provision of OSAS diagnostic services 35,211 171,064 217,042 Total net revenues 358,536 383,458 559,386 Cost of revenue Sale of medical equipment (275,465 ) (112,942 ) (464,918 ) Provision of OSAS diagnostic services (371,188 ) (630,802 ) (292,983 ) (646,653 ) (743,744 ) (757,901 ) Gross loss Sale of medical equipment 47,860 99,452 (122,574 ) Provision of OSAS diagnostic services (335,977 ) (459,738 ) (75,941 ) (288,117 ) (360,286 ) (198,515 ) Depreciation and amortization expense: Sale of medical equipment $ 7,006 $ 84,371 $ 535,800 Provision of OSAS diagnostic services 444,878 693,746 291,830 $ 451,884 $ 778,117 $ 827,630 Capital expenditure Sale of medical equipment $ - $ - $ 16,137 Provision of OSAS diagnostic services - - 760,191 $ - $ - $ 776,328 The total assets for the two reportable segments were shared and indistinguishable for reporting purposes. |
Concentrations of credit, economic, political risks and exchange risks | Concentrations of credit, economic, political risks and exchange risks The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operation in the PRC is subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances aboard, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, restricted cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the PRC and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts. A portion of the Company’s sales are credit sales which are primarily to customers whose abilities to pay are dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables are limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. The Company cannot guarantee that the current exchange rate will remain steady. Therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and yet, because of a fluctuating exchange rates, record higher or lower profit depending on exchange rate of PRC Renminbi (RMB) converted to U.S. dollars on the relevant dates. The exchange rate could fluctuate depending on changes in the political and economic environment without notice. |
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 reserve 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, 2020, 2019 and 2018, the Company did not incur any interest or penalties. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”, which will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The standard did not have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): simplifying the test for goodwill impairment”, the guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not the difference between the fair value and carrying amount of goodwill which was the step 2 test before. The ASU 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 standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to the Disclosure Requirements for Fair Value Measurement.” This standard eliminates the current requirement to disclose the amount or reason for transfers between level 1 and level 2 of the fair value hierarchy and the requirement to disclose the valuation methodology for level 3 fair value measurements. The standard includes additional disclosure requirements for level 3 fair value measurements, including the requirement to disclose the changes in unrealized gains and losses in other comprehensive income during the period and permits the disclosure of other relevant quantitative information for certain unobservable inputs. The new guidance is effective for interim and annual periods beginning after December 15, 2019. The standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement.” This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement service contract with the guidance to capitalize implementation costs of internal use software. The ASU also requires that the costs for implementation activities during the application development phase be capitalized in a hosting arrangement service contract, and costs during the preliminary and post implementation phase are expensed. The new guidance is effective for interim and annual periods beginning after December 15, 2019. The standard did not have a material impact on our consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, (“ASU 2018-17”). ASU 2018-17 requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. Entities are required to apply the amendments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The standard did not have a material impact on our consolidated financial statements In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, (“ASU 2019-04”). ASU 2019-04 clarifies and improves areas of guidance related to the recently issued standards on credit losses (ASU 2016-13), hedging (ASU 2017-12), and recognition and measurement of financial instruments (ASU 2016-01). The amendments generally have the same effective dates as their related standards. If already adopted, the amendments of ASU 2016-01 and ASU 2016-13 are effective for fiscal years beginning after December 15, 2019 and the amendments of ASU 2017-12 are effective as of the beginning of the Company’s next annual reporting period; early adoption is permitted. The standard did not have a material impact on our consolidated financial statements. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, (“ASU 2020-03”). ASU 2020-03 improves various financial instruments topics, including the CECL Standard. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments related to Issue 1, Issue 2, Issue 4 and Issue 5 were effective upon issuance of ASU 2020-03. The amendments related to Issue 3, Issue 6 and Issue 7 were effective for the Company beginning on January 1, 2020. The Company does not anticipate that the adoption of the new standard will have a material effect on its consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. ASU 2019-12 will be effective for the Company in the first quarter of 2021. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations, cash flows or disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of foreign currency exchange rates | December 31, December 31, RMB to US$ exchange rate at balance sheets dates, 6.5249 6.9762 Year Ended December 31, 2020 2019 2018 Average RMB to US$ exchange rate for each year 6.8976 6.8985 6.6090 |
Schedule of estimated useful lives of property and equipment | Leasehold improvements Shorter of the useful lives or the lease term Machinery and equipment 2 - 3 years Furniture and office equipment 3 - 5 years |
Schedule of estimated useful lives of intangible assets | Software copyrights 20 years Patent rights 10 years Other software 5 years |
Schedule of segment information | For the Years Ended December 31, 2020 2019 2018 Revenues Sale of medical equipment Abdominal CPR Compression 301,549 58,750 221,414 Mobile Medicine (sleep apnea diagnostic products) $ 21,776 $ 153,644 $ 120,930 Provision of OSAS diagnostic services 35,211 171,064 217,042 Total net revenues 358,536 383,458 559,386 Cost of revenue Sale of medical equipment (275,465 ) (112,942 ) (464,918 ) Provision of OSAS diagnostic services (371,188 ) (630,802 ) (292,983 ) (646,653 ) (743,744 ) (757,901 ) Gross loss Sale of medical equipment 47,860 99,452 (122,574 ) Provision of OSAS diagnostic services (335,977 ) (459,738 ) (75,941 ) (288,117 ) (360,286 ) (198,515 ) Depreciation and amortization expense: Sale of medical equipment $ 7,006 $ 84,371 $ 535,800 Provision of OSAS diagnostic services 444,878 693,746 291,830 $ 451,884 $ 778,117 $ 827,630 Capital expenditure Sale of medical equipment $ - $ - $ 16,137 Provision of OSAS diagnostic services - - 760,191 $ - $ - $ 776,328 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | 2020 2019 Accounts receivable $ 43,935 $ 98,195 Less: reserve for doubtful accounts (38,995 ) (36,416 ) Accounts receivable, net $ 4,940 $ 61,779 |
Other Receivables and Prepaym_2
Other Receivables and Prepayments, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Receivables And Prepayments Net [Abstract] | |
Schedule of other receivables and prepayments | 2020 2019 Rental deposits $ - $ 36,846 Prepaid expenses 74,500 29,939 Interest receivable 16,130 - Advances to employees 83 78 90,713 66,863 Less: reserves for doubtful accounts (56,771 ) (47,996 ) Other receivables and prepayment, net $ 33,942 $ 18,867 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | 2020 2019 Raw materials $ - $ 25,985 Work in progress - 779 Finished goods 147,533 1,060,615 Total inventories $ 147,533 $ 1,087,379 Less: inventory impairment loss (58,930 ) (2,363 ) Inventories, net 88,603 1,085,016 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | 2020 2019 Plant and machinery $ 1,413,088 $ 1,915,160 Automobiles - 137,367 Office and computer equipment 17,343 22,689 Total property and equipment 1,430,431 2,075,216 Less: Accumulated depreciation (1,354,778 ) (1,418,376 ) Property and equipment, net $ 75,653 $ 656,840 |
Due to Related Parties (Tables)
Due to Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Due to Related Parties [Abstract] | |
Schedule of short-term borrowings | December 31, 2020 2019 Loans from Hangzhou Lianluo Interactive. $ 996,450 $ 931,450 Loans from DGHKT. - 33,000 Loans from Ping Chen 787,608 243,881 Total short-term borrowings 1,784,058 1,208,331 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables And Accruals [Abstract] | |
Schedule of other payables and other current liabilities | 2020 2019 Accrued salaries and social welfare $ 382,769 $ 663,929 Accrued expenses 348,023 572,932 Reimbursed employee’s expense 8,174 27,460 Deposits from customers 117,204 253,014 Others 10,164 13,1383 Total accrued expenses and other current liabilities $ 866,334 $ 1,530,473 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of stock options using the black-scholes model | Expected Expected Dividend Risk Free Grant Date Fair 10 126%-228% 0% 0.73%-1.65% $9.76-$41.20 |
Schedule of option activity | Stock options Shares Weighted Aggregate intrinsic (1) Outstanding as of January 1, 2019 110,233 $ 18.72 Forfeited (10,875 ) - Exercised Outstanding as of December 31, 2019 99,358 $ 19.20 Forfeited (33,000 ) Exercised - Outstanding as of December 31, 2020 66,358 $ 21.82 $ - (1) The intrinsic value of the stock options at December 31, 2020 is the amount by which the market value of the Company’s common stock of $4.15 as of December 31, 2020 exceeds the exercise price of the options. |
Schedule of options outstanding and exercisable | Outstanding options Exercisable options Average Number Average Average Number Average $ 11.60 11,250 1.00 $ 11.60 11,250 1.00 $ 18.40 11,750 2.77 $ 18.40 11,750 2.77 $ 42.48 16,375 3.64 $ 42.48 16,375 3.64 $ 15.04 26,983 5.22 $ 15.04 26,983 5.22 66,358 66,358 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Warrants [Abstract] | |
Schedule of fair value of the outstanding warrants | December 31, 2020 2019 2018 Market price per share (USD/share) $ 4.15 $ 3.12 9.04 Exercise price (USD/share) 17.60 17.60 17.60 Risk free rate 0.41 % 1.81 % 2.60 % Dividend yield 0 % 0 % 0 % Expected term/Contractual life (years) 5.3 6.3 7.3 Expected volatility 341.88 % 279.93 % 256.20 % |
Schedule of reconciliation of the beginning and ending balances of warrants liability | December 31, 2020 2019 2018- Beginning balance $ 389,630 $ 1,129,246 $ 1,729,111 Warrants issued to Hangzhou Lianluo - - - Warrants redeemed - - - Fair value change of the issued warrants included in earnings 129,036 (739,616 ) (599,865 ) Ending balance $ 518,666 $ 389,630 1,129,246 |
Schedule of warrants activity | Number Weighted Weighted Outstanding as of January 1, 2019 125,000 $ 17.60 Granted - Forfeited - Exercised - Redeemed - Outstanding as of December 31, 2019 125,000 $ 17.60 Granted - Forfeited - Exercised - Redeemed - Outstanding as of December 31, 2020 125,000 $ 17.60 |
Schedule of class A common shares and concurrent private placements of warrants | Amount of Underlying Class A Common Shares 118,750 Exercise price $ 5.60 Floor Price $ 1.44 Expiration Date September 2, 2025 Issuance Date March 2, 2020 |
Selling Expenses (Tables)
Selling Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Selling Expenses [Abstract] | |
Schedule of selling expenses | Year ended December 31, 2020 2019 2018 Salaries and social welfare $ 58,915 $ 761,774 $ 1,765,019 Travelling expenses 1,256 34,244 170,931 Service fee - 12,369 41,437 Advertising & promotion 27,908 19,811 56,259 Entertainment fee 3,377 4,848 42,656 Office expense - - 1,960 Others 364 2,224 4,567 Total Selling expenses $ 91,820 $ 835,270 $ 2,082,829 |
General and Administrative Ex_2
General and Administrative Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Selling, General and Administrative Expense [Abstract] | |
Schedule of general and administrative expenses | Year ended December 31, 2020 2019 2018 Salaries and social welfare $ 787,700 $ 1,358,629 $ 1,068,643 Service fee 1,469,810 750,734 1,493,403 Office expense 79,733 268,555 391,850 Research & Development - - 301,713 Depreciation &Amortization 83,531 138,811 79,177 Stock compensation - 69,176 247,134 Entertainment fee 3,348 4,176 22,593 Travel Expense 57,237 1,056 17,902 Others 842 2,671 53,050 Total General and administrative expenses $ 2,482,201 $ 2,593,808 $ 3,675,465 |
Loss per Share (Tables)
Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the basic and diluted loss per share | Year ended December 31, 2020 2019 2018 Net loss attributable to the Company’s common shareholders $ (3,241,697 ) $ (4,450,994 ) $ (8,910,002 ) Weighted average shares outstanding – Basic and diluted 3,389,069 2,225,821 2,202,176 Loss per share – Basic and diluted $ (0.96 ) $ (2.00 ) $ (4.05 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of BVI and PRC components of loss before income taxes | Years Ended December 31, 2020 2019 2018 BVI $ (1,650,230 ) $ (1,385,394 ) $ (957,973 ) PRC (1,591,467 ) (3,065,600 ) (7,952,029 ) Loss before income taxes $ (3,241,697 ) $ (4,450,994 ) $ (8,910,002 ) |
Schedule of income taxes (benefit) provision | Years Ended December 31, 2020 2019 2018 Current: BVI $ - $ - $ - PRC - - - - - - Deferred: BVI - - - PRC - - - Income taxes (benefit) provision $ - $ - $ - |
Schedule of reconciliation of the provision for income taxes | Years ended December 31, 2020 2019 2018 Loss before provision for income tax and non-controlling interests $ (3,241,697 ) $ (4,450,994 ) $ (8,910,002 ) PRC corporate income tax rate 25 % 25 % 25 % Income tax benefit computed at PRC statutory corporate income tax rate (810,424 ) (1,112,749 ) (2,227,500 ) Reconciling items: Allowances and reserves 26,352 20,414 4,940 Impairment on intangible assets - - 818,935 BVI tax rate and PRC tax law differential 412,557 346,349 239,493 Others 5,301 40,828 300 Valuation allowance on deferred tax assets 366,214 705,158 1,163,832 Income tax benefit $ - $ - $ - |
Schedule of deferred tax assets and liabilities | 2020 2019 Deferred tax assets Allowances and reserves $ 181,706 $ 155,354 Impairment on intangible assets - 818,935 Net operating loss carried forward 2,418,846 3,789,703 Valuation reserve (2,600,552 ) (4,763,992 ) Deferred tax assets, non-current $ - $ - |
Concentrations (Tables)
Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedule of revenues by products | For the years ended December 31, 2020 2019 2018 Sale of medical equipment Abdominal CPR Compression $ 301,549 $ 58,750 $ 221,414 Mobile Medicine (sleep apnea diagnostic products) 21,776 153,644 120,930 OSAS service (analysis and detection) 35,211 171,064 217,042 Total Revenues $ 358,536 $ 383,458 $ 559,386 |
Organization and Principal Ac_2
Organization and Principal Activities (Details) | Oct. 21, 2020 | Aug. 13, 2020ILS (₪) | Apr. 28, 2016USD ($)shares | Dec. 31, 2020USD ($) |
Organization and Principal Activities (Details) [Line Items] | ||||
Aggregate purchase price | $ 7,192,537 | |||
Combination shares of ratio, description | the Company completed a share combination of its common shares at a ratio of one-for-eight, which decreased the Company’s outstanding Class A common shares from 17,685,475 shares to 2,210,683 shares and the Company’s outstanding Class B common shares from 11,111,111 shares to 1,388,888 shares. This share combination also decreased the Company’s authorized shares to 6,250,000 common shares of par value of US$0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares | |||
Hangzhou Liaison Interactive Information Technology Co Ltd [Member] | ||||
Organization and Principal Activities (Details) [Line Items] | ||||
Common shares | shares | 11,111,111 | |||
Aggregate purchase price | $ 20,000,000 | |||
Lianluo Connection Medical Wearable Device Technology Co Ltd [Member] | Lianluo Smart Limited [Member] | ||||
Organization and Principal Activities (Details) [Line Items] | ||||
Cash consideration amount | ₪ | ₪ 0 |
Going Concern and Liquidity (De
Going Concern and Liquidity (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Going Concern [Abstract] | ||||
Cash and cash equivalents | $ 1,816,177 | $ 22,834 | $ 477,309 | $ 6,809,485 |
Increase of cash and cash equivalents | 20,000 | |||
Net loss | (3,241,697) | $ (4,450,994) | $ (8,910,002) | |
Cash in operation activities | 2,340,000 | |||
Working capital | $ 3,260,000 | |||
Description of equity financing | In February and March 2020, the Company obtained approximately $7.2 million equity financing, net of placement agent’s commissions and other expenses. In late January 2021, 1,255,000 of warrants were exercised resulting in aggregate cash proceeds to the Company of $6.8 million. Considering equity financing and the cost cutting activities, the Company believes that the current cash and cash equivalents and the anticipated cash flows from operations will be sufficient to meet the anticipated working capital requirements and expenditures for the next 12 months. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | Oct. 21, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Description of share combination | This share combination also decreased the Company’s authorized shares to 6,250,000 common shares of par value of US$0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares. | |||
Restricted cash | $ 3,500,000 | |||
Allowance for doubtful accounts | 38,995 | $ 36,416 | ||
Impairment loss | $ 3,281,779 | |||
Equity securities, description | 5% | |||
Warrant term | 12 months | |||
Tax benefit, description | 50% | |||
sales of goods [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Value added tax payable, Percentage | 13.00% | |||
Service [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Value added tax payable, Percentage | 6.00% | |||
Maximum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Accounts receivable terms | 180 days | |||
Minimum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Accounts receivable terms | 60 days | |||
Continuing Operations [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Comprehensive loss | $ 27,908 | 19,811 | 56,259 | |
Warranty expense | 728 | 7,911 | 10,261 | |
Research and development costs | 0 | 0 | 301,713 | |
Government subsidies | $ 447 | $ 0 | $ 0 | |
Class A Common Shares [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Outstanding shares (in Shares) | 2,210,683 | 836,933 | ||
Class A Common Shares [Member] | Maximum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Outstanding shares (in Shares) | 17,685,475 | |||
Class A Common Shares [Member] | Minimum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Outstanding shares (in Shares) | 2,210,683 | |||
Class B Common Shares [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Outstanding shares (in Shares) | 1,388,888 | 1,388,888 | ||
Class B Common Shares [Member] | Maximum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Outstanding shares (in Shares) | 11,111,111 | |||
Class B Common Shares [Member] | Minimum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Outstanding shares (in Shares) | 1,388,888 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of foreign currency exchange rates - RMB [Member] | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of Significant Accounting Policies (Details) - Schedule of foreign currency exchange rates [Line Items] | |||
RMB to US$ exchange rate at balance sheets dates | 6.5249 | 6.9762 | |
Average RMB to US$ exchange rate for each year | 6.8976 | 6.8985 | 6.6090 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment | 12 Months Ended |
Dec. 31, 2020 | |
Leasehold improvements [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items] | |
Property and equipment estimated useful lives | Shorter of the useful lives or the lease term |
Machinery and equipment [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items] | |
Property and equipment estimated useful lives, term | 2 years |
Machinery and equipment [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items] | |
Property and equipment estimated useful lives, term | 3 years |
Furniture and office equipment [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items] | |
Property and equipment estimated useful lives, term | 3 years |
Furniture and office equipment [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of property and equipment [Line Items] | |
Property and equipment estimated useful lives, term | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of intangible assets | 12 Months Ended |
Dec. 31, 2020 | |
Software copyrights [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of intangible assets [Line Items] | |
Intangible assets estimated useful lives | 20 years |
Patent rights [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of intangible assets [Line Items] | |
Intangible assets estimated useful lives | 10 years |
Other software [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of intangible assets [Line Items] | |
Intangible assets estimated useful lives | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details) - Schedule of segment information - Parent [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Sale of medical equipment | |||
Abdominal CPR Compression | $ 301,549 | $ 58,750 | $ 221,414 |
Mobile Medicine (sleep apnea diagnostic products) | 21,776 | 153,644 | 120,930 |
Provision of OSAS diagnostic services | 35,211 | 171,064 | 217,042 |
Total net revenues | 358,536 | 383,458 | 559,386 |
Cost of revenue | |||
Sale of medical equipment | (275,465) | (112,942) | (464,918) |
Provision of OSAS diagnostic services | (371,188) | (630,802) | (292,983) |
Total cost of revenue | (646,653) | (743,744) | (757,901) |
Gross loss | |||
Sale of medical equipment | 47,860 | 99,452 | (122,574) |
Provision of OSAS diagnostic services | (335,977) | (459,738) | (75,941) |
Total gross loss | (288,117) | (360,286) | (198,515) |
Depreciation and amortization expense: | |||
Sale of medical equipment | 7,006 | 84,371 | 535,800 |
Provision of OSAS diagnostic services | 444,878 | 693,746 | 291,830 |
Total depreciation and amortization expenses | 451,884 | 778,117 | 827,630 |
Capital expenditure | |||
Sale of medical equipment | 16,137 | ||
Provision of OSAS diagnostic services | 760,191 | ||
Total capital expenditure | $ 776,328 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts Receivable, Net (Details) [Line Items] | |||
Bad debt expense | $ 26,688 | ||
Recovery bad debt | 27,993 | ||
Disposal bed expense | $ 10,148 | $ 5,826 | |
Accounts Receivable [Member] | |||
Accounts Receivable, Net (Details) [Line Items] | |||
Bad debt expense | $ 30,572 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details) - Schedule of accounts receivable - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of accounts receivable [Abstract] | ||
Accounts receivable | $ 43,935 | $ 98,195 |
Less: reserve for doubtful accounts | (38,995) | (36,416) |
Accounts receivable, net | $ 4,940 | $ 61,779 |
Other Receivables and Prepaym_3
Other Receivables and Prepayments, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other Receivables And Prepayments Net [Abstract] | |||
Bad debt expense | $ 26,688 | ||
Recovery of bad debt | $ 17,913 | ||
Bad debts on other receivables | $ 499 | $ 16,403 |
Other Receivables and Prepaym_4
Other Receivables and Prepayments, Net (Details) - Schedule of other receivables and prepayments - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of other receivables and prepayments [Abstract] | ||
Rental deposits | $ 36,846 | |
Prepaid expenses | 74,500 | 29,939 |
Interest receivable | 16,130 | |
Advances to employees | 83 | 78 |
Other receivables | 90,713 | 66,863 |
Less: reserves for doubtful accounts | (56,771) | (47,996) |
Other receivables and prepayment, net | $ 33,942 | $ 18,867 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | |||
Write-downs of inventories | $ 58,930 | $ 2,363 | $ 0 |
Inventories (Details) - Schedul
Inventories (Details) - Schedule of inventories - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of inventories [Abstract] | ||
Raw materials | $ 25,985 | |
Work in progress | 779 | |
Finished goods | 147,533 | 1,060,615 |
Total inventories | 147,533 | 1,087,379 |
Less: inventory impairment loss | (58,930) | (2,363) |
Inventories, net | $ 88,603 | $ 1,085,016 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation | $ 451,884 | $ 778,117 | $ 467,929 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of property and equipment - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of property and equipment [Abstract] | ||
Plant and machinery | $ 1,413,088 | $ 1,915,160 |
Automobiles | 137,367 | |
Office and computer equipment | 17,343 | 22,689 |
Total property and equipment | 1,430,431 | 2,075,216 |
Less: Accumulated depreciation | (1,354,778) | (1,418,376) |
Property and equipment, net | $ 75,653 | $ 656,840 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets, Net [Abstract] | |||
Intangible assets | |||
Amortization expense | 0 | 0 | $ 359,701 |
Impairment on intangible assets | 0 | $ 0 | $ 3,281,779 |
Unamortized software copyright and patent and others | $ 3,281,779 |
Equity Securities (Details)
Equity Securities (Details) - USD ($) | Apr. 09, 2019 | Jan. 30, 2019 | Nov. 03, 2017 | Dec. 31, 2020 | Dec. 31, 2019 |
Equity Securities (Details) [Line Items] | |||||
Aggregate purchase price | $ 7,192,537 | ||||
Purchase agreement, description | one-for-two (1:2) | ||||
GHSI [Member] | |||||
Equity Securities (Details) [Line Items] | |||||
Aggregate purchase price | 1,304,348 | ||||
Common stock, par value | $ 0.001 | ||||
Share price per share | $ 1.15 | $ 0.42 | |||
Offering price per share | $ 0.22 | ||||
Recognized fair value changes in gain amount | $ 130,435 | ||||
Unrealized loss on securities | $ 1,356,565 | ||||
Private Placement [Member] | |||||
Equity Securities (Details) [Line Items] | |||||
Aggregate purchase price | $ 1,500,000 | ||||
IPO [Member] | |||||
Equity Securities (Details) [Line Items] | |||||
Aggregate purchase price | 1,250,000 | ||||
Offering price per share | $ 4 | ||||
IPO [Member] | GHSI [Member] | |||||
Equity Securities (Details) [Line Items] | |||||
Aggregate purchase price | $ 5,000,000 | ||||
Digital Grid (Hong Kong) Technology Co., Limited [Member] | GHSI [Member] | |||||
Equity Securities (Details) [Line Items] | |||||
Aggregate purchase price | 4,347,827 | ||||
Aggregate purchase price | $ 5,000,000 |
Due to Related Parties (Details
Due to Related Parties (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Due to Related Parties [Abstract] | |||
Interest expense on short-term borrowings | $ 0 | $ 0 | $ 200,799 |
Due to Related Parties (Detai_2
Due to Related Parties (Details) - Schedule of due to related parties - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Short-term Debt [Line Items] | ||
Total short-term borrowings | $ 1,784,058 | $ 1,208,331 |
Hangzhou Liaison Interactive [Member] | ||
Short-term Debt [Line Items] | ||
Total short-term borrowings | 996,450 | 931,450 |
DGHKT [Member] | ||
Short-term Debt [Line Items] | ||
Total short-term borrowings | 33,000 | |
Ping Chen [Member] | ||
Short-term Debt [Line Items] | ||
Total short-term borrowings | $ 787,608 | $ 243,881 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - Schedule of other payables and other current liabilities - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables And Accruals [Abstract] | ||
Accrued salaries and social welfare | $ 382,769 | $ 663,929 |
Accrued expenses | 348,023 | 572,932 |
Reimbursed employee's expense | 8,174 | 27,460 |
Deposits from customers | 117,204 | 253,014 |
Others | 10,164 | 131,383 |
Total accrued expenses and other current liabilities | $ 866,334 | $ 1,530,473 |
Commitments and Contingency (De
Commitments and Contingency (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 57,202 | $ 206,006 | $ 301,021 |
Equity (Details)
Equity (Details) - USD ($) | Oct. 21, 2020 | Mar. 02, 2020 | Feb. 25, 2020 | Feb. 14, 2020 | Jun. 08, 2017 | Mar. 21, 2016 | Aug. 07, 2015 | Oct. 07, 2013 | Aug. 31, 2016 | Apr. 28, 2016 | Aug. 20, 2014 | Dec. 29, 2011 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2016 | Apr. 27, 2016 |
Equity (Details) [Line Items] | |||||||||||||||||
Purchase of common shares (in Dollars) | $ 6,250,000 | ||||||||||||||||
Subscription receivable (in Dollars) | $ 1,492,538 | ||||||||||||||||
Common stock, par value (in Dollars per share) | $ 0.021848 | ||||||||||||||||
Consulting expenses (in Dollars) | $ 835,999 | ||||||||||||||||
Registered direct offering, description | we consummated a third registered direct offering of 612,500 Class A Common Shares and a concurrent private placement of warrants to purchase up to 612,500 Class A Common Shares with the same accredited investors. The purchase price per Class A Common Share in this registered direct offering was $5.60 per share. The warrants sold in the third concurrent private placement are exercisable for a period of five and one-half years upon issuance, at an initial exercise price of $5.60 per share, subject to anti-dilution protections. | we consummated a second registered direct offering of 437,500 Class A Common Shares and a concurrent private placement of warrants to purchase up to 437,500 Class A Common Shares with the same accredited investors. The purchase price per Class A Common Share in the second registered direct offering was $5.60. The warrants sold in the second concurrent private placement are exercisable for a period of five and one-half years upon issuance, at an initial exercise price of $5.60 per share, subject to anti-dilution protections. | the Company consummated a registered direct offering of 323,750 Class A Common Shares and a concurrent private placement of warrants to purchase up to 323,750 Class A Common Shares with certain accredited investors. The purchase price per Class A Common Share in the registered direct offering was $6.80. The warrants sold in the concurrent private placement are exercisable for a period of five and one-half years upon issuance, at an initial exercise price of $6.80 per share, which was thereafter adjusted to $4.9912, subject to full ratchet anti-dilution protection. | ||||||||||||||
Share combination, description | the Company completed a share combination of its common shares at a ratio of one-for-eight, which decreased the Company’s outstanding Class A common shares from 17,685,475 shares to 2,210,683 shares and the Company’s outstanding Class B common shares from 11,111,111 shares to 1,388,888 shares. This share combination also decreased the Company’s authorized shares to 6,250,000 common shares of par value of US$0.021848 each, of which 4,736,111 are designated as Class A common shares and 1,513,889 are designated as Class B common shares. | ||||||||||||||||
Statutory surplus reserve | 10.00% | ||||||||||||||||
Percentage of reserve | 50.00% | ||||||||||||||||
Remaining statutory surplus reserve | 25.00% | ||||||||||||||||
Options exercise price (in Dollars per share) | $ 4.15 | ||||||||||||||||
Options exercised, shares | 5,000 | ||||||||||||||||
Cash purchase, shares | 1,000 | ||||||||||||||||
Aggregate consideration (in Dollars) | $ 7,192,537 | ||||||||||||||||
Compensation expenses (in Dollars) | 0 | $ 69,176 | $ 247,134 | ||||||||||||||
Unrecognized share based compensation expense (in Dollars) | |||||||||||||||||
Security Purchase Agreement [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Purchase of common shares (in Dollars) | $ 20,000,000 | ||||||||||||||||
Common Stock [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Common shares issued | 25,000 | ||||||||||||||||
Consulting expenses (in Dollars) | $ 179,112 | $ 108,888 | |||||||||||||||
Management and advisory services term, description | period of 12 months up to August 15, 2019 | ||||||||||||||||
Fair value of shares | 288,000 | ||||||||||||||||
Chen Ping [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Options exercise price (in Dollars per share) | $ 42.48 | ||||||||||||||||
Employee Stock Option [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Option expiry term | 10 years | ||||||||||||||||
Issued aggregate options | 72,608 | 43,625 | 11,750 | 16,375 | 56,250 | ||||||||||||
Options exercise price (in Dollars per share) | $ 15.04 | $ 13.12 | $ 18.40 | $ 11.60 | |||||||||||||
Options vesting, description | options vest in equal annual installments over the two years of the agreements ending March 20, 2018. | options vest in equal annual installments over the two years of the agreements ending August 6, 2017. | options vest in equal annual installments over the five years of the agreement ending October 6, 2018. | options vest in equal annual installments over the five years of the agreement ending August 19, 2019. | options vest in equal annual installments over the five years of the agreements ending December 28, 2016. | ||||||||||||
Consultant [Member] | Common Stock [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Common shares issued | 34,375 | ||||||||||||||||
Common shares issued, description | The 34,375 common shares were issued in two tranches including 17,187 common shares issued on February 21, 2018 and 17,188 common shares issued on March 5, 2018. The fair value of the 34,375 common shares was $835,999, which was calculated based on the grant date stock price of $25.44 on February 21, 2018 and of $23.20 on March 5, 2018. | ||||||||||||||||
Option [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Options exercised, shares | 1,375 | ||||||||||||||||
Cash purchase, shares | 1,375 | ||||||||||||||||
Aggregate consideration (in Dollars) | $ 17,851 | ||||||||||||||||
Hangzhou Lianluo [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Restricted common shares | 1,388,888 | ||||||||||||||||
Aggregate Value (in Dollars) | $ 20,000,000 | ||||||||||||||||
Purchase price (in Dollars per share) | $ 14.40 | $ 10.64 | |||||||||||||||
Percentage of premium | 35.00% | ||||||||||||||||
Common Stock Class A [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Common stock, shares authorized | 4,736,111 | 4,736,111 | |||||||||||||||
Common stock, par value (in Dollars per share) | $ 0.021848 | $ 0.021848 | |||||||||||||||
Common stock, par value (in Dollars per share) | $ 0.021848 | ||||||||||||||||
Common shares issued | 4,736,111 | 1,373,750 | |||||||||||||||
Common stock shares issued | 2,210,683 | 836,933 | |||||||||||||||
Common stock, shares outstanding | 2,210,683 | 836,933 | |||||||||||||||
Issued aggregate options | 2,375 | ||||||||||||||||
Aggregate consideration (in Dollars) | $ 30,014 | ||||||||||||||||
Common Stock Class A [Member] | LLIT is authorized [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Common stock, shares authorized | 4,736,111 | ||||||||||||||||
Common stock, par value (in Dollars per share) | $ 0.021848 | ||||||||||||||||
Common Stock Class B [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Common stock, shares authorized | 1,513,889 | 1,513,889 | |||||||||||||||
Common stock, par value (in Dollars per share) | $ 0.021848 | $ 0.021848 | |||||||||||||||
Common stock, par value (in Dollars per share) | $ 0.021848 | ||||||||||||||||
Common shares issued | 1,513,889 | ||||||||||||||||
Common stock shares issued | 1,388,888 | 1,388,888 | |||||||||||||||
Common stock, shares outstanding | 1,388,888 | 1,388,888 | |||||||||||||||
Issued aggregate options | |||||||||||||||||
Aggregate consideration (in Dollars) | |||||||||||||||||
Common Stock Class B [Member] | LLIT is authorized [Member] | |||||||||||||||||
Equity (Details) [Line Items] | |||||||||||||||||
Common stock, shares authorized | 1,513,889 |
Equity (Details) - Schedule of
Equity (Details) - Schedule of stock options using the black-scholes model | 12 Months Ended |
Dec. 31, 2020$ / shares | |
Equity (Details) - Schedule of stock options using the black-scholes model [Line Items] | |
Expected Terms (years) | 10 years |
Dividend Yield | 0.00% |
Minimum [Member] | |
Equity (Details) - Schedule of stock options using the black-scholes model [Line Items] | |
Expected Volatility | 126.00% |
Risk Free Interest Rate | 0.73% |
Grant Date Fair Value Per share (in Dollars per share) | $ 9.76 |
Maximum [Member] | |
Equity (Details) - Schedule of stock options using the black-scholes model [Line Items] | |
Expected Volatility | 228.00% |
Risk Free Interest Rate | 1.65% |
Grant Date Fair Value Per share (in Dollars per share) | $ 41.20 |
Equity (Details) - Schedule o_2
Equity (Details) - Schedule of option activity - Employee Stock Option [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | ||
Equity (Details) - Schedule of option activity [Line Items] | |||
Outstanding, Beginning Balance | 99,358 | 110,233 | |
Weighted average exercise price, Beginning Balance (in Dollars per share) | $ 19.20 | $ 18.72 | |
Aggregate intrinsic value, Beginning Balance (in Dollars) | [1] | ||
Forfeited | (33,000) | (10,875) | |
Exercised | |||
Outstanding, Ending Balance | 66,358 | 99,358 | |
Weighted average exercise price, Ending Balance (in Dollars per share) | $ 21.82 | $ 19.20 | |
Aggregate intrinsic value, Ending Balance (in Dollars) | [1] | ||
[1] | The intrinsic value of the stock options at December 31, 2020 is the amount by which the market value of the Company’s common stock of $4.15 as of December 31, 2020 exceeds the exercise price of the options. |
Equity (Details) - Schedule o_3
Equity (Details) - Schedule of options outstanding and exercisable | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding options, Number | 66,358 |
Exercisable options, Number | 66,358 |
Stock Option One [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding options, Average exercise price (in Dollars per share) | $ / shares | $ 11.60 |
Outstanding options, Number | 11,250 |
Outstanding options, Average remaining contractual life | 1 year |
Exercisable options, Average exercise price (in Dollars per share) | $ / shares | $ 11.60 |
Exercisable options, Number | 11,250 |
Exercisable options, Average remaining contractual life | 1 year |
Stock Option Two [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding options, Average exercise price (in Dollars per share) | $ / shares | $ 18.40 |
Outstanding options, Number | 11,750 |
Outstanding options, Average remaining contractual life | 2 years 281 days |
Exercisable options, Average exercise price (in Dollars per share) | $ / shares | $ 18.40 |
Exercisable options, Number | 11,750 |
Exercisable options, Average remaining contractual life | 2 years 281 days |
Stock Option Three [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding options, Average exercise price (in Dollars per share) | $ / shares | $ 42.48 |
Outstanding options, Number | 16,375 |
Outstanding options, Average remaining contractual life | 3 years 233 days |
Exercisable options, Average exercise price (in Dollars per share) | $ / shares | $ 42.48 |
Exercisable options, Number | 16,375 |
Exercisable options, Average remaining contractual life | 3 years 233 days |
Stock Option Four [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding options, Average exercise price (in Dollars per share) | $ / shares | $ 15.04 |
Outstanding options, Number | 26,983 |
Outstanding options, Average remaining contractual life | 5 years 80 days |
Exercisable options, Average exercise price (in Dollars per share) | $ / shares | $ 15.04 |
Exercisable options, Number | 26,983 |
Exercisable options, Average remaining contractual life | 5 years 80 days |
Warrants (Details)
Warrants (Details) - $ / shares | 1 Months Ended | 12 Months Ended | |
Apr. 28, 2016 | Dec. 31, 2020 | Dec. 31, 2019 | |
Warrants (Details) [Line Items] | |||
Warrants issued | 125,000 | 125,000 | |
Warrants outstanding | 125,000 | 125,000 | |
Warrants, description | From February to March 2020, the Company consummated three registered direct offerings of 1,373,750 Class A Common Shares and concurrent private placements of warrants to purchase up to 1,373,750 Class A Common Shares with three investors. In late January 2021, 1,255,000 of these warrants were exercised and leaving 118,750 warrants that remain outstanding. | ||
Hangzhou Lianluo [Member] | |||
Warrants (Details) [Line Items] | |||
Warrants issued for services | 125,000 | ||
Aggregate common stock shares | 125,000 | ||
Exercise price (in Dollars per share) | $ 17.60 |
Warrants (Details) - Schedule o
Warrants (Details) - Schedule of fair value of the outstanding warrants - Stock Options [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Warrants (Details) - Schedule of fair value of the outstanding warrants [Line Items] | |||
Market price per share (USD/share) (in Dollars per share) | $ 4.15 | $ 3.12 | $ 9.04 |
Exercise price (USD/share) (in Dollars per share) | $ 17.60 | $ 17.60 | $ 17.60 |
Risk free rate | 0.41% | 1.81% | 2.60% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected term/Contractual life (years) | 5 years 109 days | 6 years 109 days | 7 years 109 days |
Expected volatility | 341.88% | 279.93% | 256.20% |
Warrants (Details) - Schedule_2
Warrants (Details) - Schedule of reconciliation of the beginning and ending balances of warrants liability - Fair Value, Inputs, Level 3 [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Warrants (Details) - Schedule of reconciliation of the beginning and ending balances of warrants liability [Line Items] | |||
Beginning balance | $ 389,630 | $ 1,129,246 | $ 1,729,111 |
Warrants issued to Hangzhou Lianluo | |||
Warrants redeemed | |||
Fair value change of the issued warrants included in earnings | 129,036 | (739,616) | (599,865) |
Ending balance | $ 518,666 | $ 389,630 | $ 1,129,246 |
Warrants (Details) - Schedule_3
Warrants (Details) - Schedule of warrants activity - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Class of Warrant or Right [Line Items] | ||
Weighted Average Exercise Price, Beginning Balance (in Dollars per share) | $ 17.60 | $ 17.60 |
Weighted Average Exercise Price, Ending Balance (in Dollars per share) | $ 17.60 | $ 17.60 |
Warrants [Member] | ||
Class of Warrant or Right [Line Items] | ||
Outstanding, Beginning Balance | 125,000 | 125,000 |
Granted | ||
Forfeited | ||
Exercised | ||
Redeemed | ||
Outstanding, Ending Balance | 125,000 | 125,000 |
Warrants (Details) - Schedule_4
Warrants (Details) - Schedule of class A common shares and concurrent private placements of warrants | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Schedule of class A common shares and concurrent private placements of warrants [Abstract] | |
Amount of Underlying Class A Common Shares | shares | 118,750 |
Exercise price | $ 5.60 |
Floor Price | $ 1.44 |
Expiration Date | Sep. 2, 2025 |
Issuance Date | Mar. 2, 2020 |
Selling Expenses (Details) - Sc
Selling Expenses (Details) - Schedule of selling expenses - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of selling expenses [Abstract] | |||
Salaries and social welfare | $ 58,915 | $ 761,774 | $ 1,765,019 |
Travelling expenses | 1,256 | 34,244 | 170,931 |
Service fee | 12,369 | 41,437 | |
Advertising & promotion | 27,908 | 19,811 | 56,259 |
Entertainment fee | 3,377 | 4,848 | 42,656 |
Office expense | 1,960 | ||
Others | 364 | 2,224 | 4,567 |
Total Selling expenses | $ 91,820 | $ 835,270 | $ 2,082,829 |
General and Administrative Ex_3
General and Administrative Expenses (Details) - Schedule of general and administrative expenses - General and Administrative Expense [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
General and Administrative Expenses (Details) - Schedule of general and administrative expenses [Line Items] | |||
Salaries and social welfare | $ 787,700 | $ 1,358,629 | $ 1,068,643 |
Service fee | 1,469,810 | 750,734 | 1,493,403 |
Office expense | 79,733 | 268,555 | 391,850 |
Research & Development | 301,713 | ||
Depreciation &Amortization | 83,531 | 138,811 | 79,177 |
Stock compensation | 69,176 | 247,134 | |
Entertainment fee | 3,348 | 4,176 | 22,593 |
Travel Expense | 57,237 | 1,056 | 17,902 |
Others | 842 | 2,671 | 53,050 |
Total General and administrative expenses | $ 2,482,201 | $ 2,593,808 | $ 3,675,465 |
Loss per Share (Details) - Sche
Loss per Share (Details) - Schedule of reconciliation of the basic and diluted loss per share - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of reconciliation of the basic and diluted loss per share [Abstract] | |||
Net loss attributable to the Company’s common shareholders | $ (3,241,697) | $ (4,450,994) | $ (8,910,002) |
Weighted average shares outstanding – Basic and diluted | 3,389,069 | 2,225,821 | 2,202,176 |
Loss per share – Basic and diluted | $ (0.96) | $ (2) | $ (4.05) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes (Details) [Line Items] | |||
Tax rate | 25.00% | 25.00% | 25.00% |
Net operating loss carry forwards | $ 9,675,383 | ||
Operating loss carry forwards expiry | 2025 | ||
nrecognized tax benefits | $ 0 | $ 0 | |
Uncertain tax position, description | 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. | ||
Lianluo Connection [Member] | |||
Income Taxes (Details) [Line Items] | |||
Tax rate | 25.00% |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of BVI and PRC components of loss before income taxes - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of BVI and PRC components of loss before income taxes [Abstract] | |||
BVI | $ (1,650,230) | $ (1,385,394) | $ (957,973) |
PRC | (1,591,467) | (3,065,600) | (7,952,029) |
Loss before income taxes | $ (3,241,697) | $ (4,450,994) | $ (8,910,002) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of income taxes (benefit) provision - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | |||
BVI | |||
PRC | |||
Current income taxes (benefit) provision | |||
Deferred: | |||
BVI | |||
PRC | |||
Income taxes (benefit) provision |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of reconciliation of the provision for income taxes - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of reconciliation of the provision for income taxes [Abstract] | |||
Loss before provision for income tax and non-controlling interests | $ (3,241,697) | $ (4,450,994) | $ (8,910,002) |
PRC corporate income tax rate | 25.00% | 25.00% | 25.00% |
Income tax benefit computed at PRC statutory corporate income tax rate | $ (810,424) | $ (1,112,749) | $ (2,227,500) |
Reconciling items: | |||
Allowances and reserves | 26,352 | 20,414 | 4,940 |
Impairment on intangible assets | 818,935 | ||
BVI tax rate and PRC tax law differential | 412,557 | 346,349 | 239,493 |
Others | 5,301 | 40,828 | 300 |
Valuation allowance on deferred tax assets | 366,214 | 705,158 | 1,163,832 |
Income tax benefit |
Income Taxes (Details) - Sche_4
Income Taxes (Details) - Schedule of deferred tax assets and liabilities - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets | ||
Allowances and reserves | $ 181,706 | $ 155,354 |
Impairment on intangible assets | 818,935 | |
Net operating loss carried forward | 2,418,846 | 3,789,703 |
Valuation reserve | (2,600,552) | (4,763,992) |
Deferred tax assets, non-current |
Related Party Transactions an_2
Related Party Transactions and Balance (Details) | Jul. 14, 2020USD ($) | Jul. 01, 2018USD ($) | Jul. 01, 2018CNY (¥) | Mar. 15, 2018USD ($) | Mar. 15, 2018CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Purchases from related party | $ 75,653 | $ 656,840 | ||||||
Remaining loan balance | $ 0 | |||||||
Borrowed amount | 1,784,058 | 1,208,331 | ||||||
Principal amount | 33,178 | |||||||
Hangzhou Lianluo [Member] | ||||||||
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Purchases from related party | 44,614 | 42,000 | 204 | |||||
Annual rental | 0 | $ 35,892 | $ 39,942 | |||||
Outstanding rental payable to related party | 81,126 | |||||||
Borrowings loans description | the Company borrowed an aggregate of $942,500 from Hangzhou Lianluo and repaid $0. As of December 31, 2020, the loan balances were $996,450. These loans were extended, interest-free as of December 31, 2020 and without specific repayment date, which is based upon both parties’ agreement. | the Company borrowed from Hangzhou Lianluo $3,682,592 carrying an annual interest rate of 5%-8%, which was fully settled through a debt offset agreement among the Company, Hangzhou Lianluo and DGHKT as described below “iv) Borrowings to DGHKT.” | ||||||
Hangzhou Lianluo [Member] | ||||||||
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Payable to Hangzhou Lianluo's subsidiary | 3,019 | |||||||
Mr. Ping Chen [Member] | ||||||||
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Sale of equipment | $ 9,588 | |||||||
Ownership interest | 51.00% | |||||||
Outstanding receivable | $ 11,455 | |||||||
Hangzhou Lianluo [Member] | ||||||||
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Annual rental | $ 84,447 | ¥ 580,788 | ||||||
Loaned amount | $ 6,000,000 | |||||||
Lease period | 12 years | 12 years | ||||||
Borrowed amount | $ 34,300,000 | ¥ 5,200,000 | ||||||
DGHKT [Member] | ||||||||
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Borrowed amount | 33,000 | |||||||
Repayment of the loan and related interest | 0 | 0 | ||||||
Principal amount | $ 33,000 | |||||||
Mr. Ping Chen [Member] | ||||||||
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Borrowed amount | 787,608 | 243,881 | ||||||
Borrowing from related party | $ 498,191 | 387,182 | ||||||
Borrowed debt | $ 143,301 | |||||||
Digital Grid Hong Kong Technology Co Limited [Member] | ||||||||
Related Party Transactions and Balance (Details) [Line Items] | ||||||||
Borrowings loans description | Pursuant to an agreement dated December 27, 2018, the Company, DGHKT, Hangzhou Lianluo agreed that the outstanding amount owed by DGHKT to the Company of RMB35.6 million be repaid by Hangzhou Lianluo on behalf of DGHKT, to the Company. This repayment is agreed to be settled in the form of offset against the amount owed by the Company to Hangzhou Lianluo of RMB35.6 million (approximately $5.2 million). | Pursuant to an agreement dated December 27, 2018, the Company, DGHKT, Hangzhou Lianluo agreed that the outstanding amount owed by DGHKT to the Company of RMB35.6 million be repaid by Hangzhou Lianluo on behalf of DGHKT, to the Company. This repayment is agreed to be settled in the form of offset against the amount owed by the Company to Hangzhou Lianluo of RMB35.6 million (approximately $5.2 million). |
Concentrations (Details)
Concentrations (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Concentrations (Details) [Line Items] | |||
Number of major customers | 2 | 2 | 2 |
Number of major suppliers | 1 | 2 | |
Customer One [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 84.00% | 21.00% | 16.00% |
Customer Two [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 7.00% | 15.00% | 13.00% |
Supplier One [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 100.00% | 31.00% | |
Supplier Two [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 17.00% |
Concentrations (Details) - Sche
Concentrations (Details) - Schedule of revenues by products - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Sale of medical equipment | |||
Total Revenues | $ 358,536 | $ 383,458 | $ 559,386 |
Abdominal CPR Compression [Member] | |||
Sale of medical equipment | |||
Total Revenues | 301,549 | 58,750 | 221,414 |
Mobile Medicine [Member] | |||
Sale of medical equipment | |||
Total Revenues | 21,776 | 153,644 | 120,930 |
OSAS Service [Member] | |||
Sale of medical equipment | |||
Total Revenues | $ 35,211 | $ 171,064 | $ 217,042 |
Contingencies (Details)
Contingencies (Details) | 1 Months Ended |
Oct. 23, 2020USD ($)$ / shares | |
Contingencies (Details) [Line Items] | |
Conversion of common stock | $ / shares | $ 5.8417 |
Termination fee | $ | $ 450,000 |
Beijing Fenjin [Member] | |
Contingencies (Details) [Line Items] | |
Transfer agreement description | the Company also entered into an equity transfer agreement (the “Disposition Agreement”) with Beijing Fenjin Times Technology Development Co., Ltd. (“Beijing Fenjin”) and its wholly owned subsidiary, Lianluo Connection, pursuant to which Beijing Fenjin will acquire 100% of the equity interests in Lianluo Connection for RMB0 immediately following completion of the Merger. In exchange for all of the equity interests in Lianluo Connection, Beijing Fenjin agreed to contribute RMB87.784 million to Lianluo Connection’s registered capital by September 23, 2023 in accordance with the articles of association of Lianluo Connection. In addition, as an inducement for Beijing Fenjin entering into the Disposition Agreement, the Company agreed to convert the indebtedness in the aggregate amount of $11,255,188.47 that Lianluo Connection owes to the Company into additional paid-in capital of Lianluo Connection immediately prior to the closing of the disposition. |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Jan. 31, 2021 | Mar. 02, 2020 | Feb. 25, 2020 | Feb. 14, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Events (Details) [Line Items] | ||||||
Warrant exercised | 125,000 | 125,000 | ||||
Subsequent Event [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Warrant exercised | 1,255,000 | |||||
Cash proceeds (in Dollars) | $ 6.8 | |||||
Warrant exercised | 118,750 | |||||
Class A Common Shares [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Warrants to purchase | 1,373,750 | 1,373,750 | 1,373,750 |