Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ReTo Eco-Solutions, Inc. |
Entity Central Index Key | 1,687,277 |
Trading Symbol | RETO |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2,017 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 22,760,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Current Assets: | |||
Cash and cash equivalents | $ 10,863,040 | $ 1,594,594 | |
Restricted cash | 230,400 | ||
Accounts receivable, net | 18,503,286 | 15,207,029 | |
Advances to suppliers, net | 1,847,637 | 1,882,408 | |
Inventories | 1,611,836 | 1,308,526 | |
Acquisition deposit | 565,000 | ||
Prepaid expenses and other current assets | 774,665 | 356,498 | |
Total Current Assets | 33,600,464 | 21,144,455 | |
Property, plant and equipment, net | 39,833,280 | 34,160,330 | |
Intangible assets, net | 7,401,550 | 7,092,370 | |
Other assets | 174,829 | ||
Deferred tax assets | 296,535 | 89,015 | |
Total Assets | 81,131,829 | 62,660,999 | |
Current Liabilities: | |||
Short term bank loans, net | 7,540,381 | 5,734,666 | |
Long term bank loans-current portion | 4,460,524 | 4,391,260 | |
Bank notes payable | 720,000 | ||
Advances from customers | 7,078,609 | 7,924,658 | |
Deferred revenue | 520,872 | 507,200 | |
Accounts payable | 2,506,484 | 4,405,118 | |
Accrued and other liabilities | 716,960 | 915,307 | |
Taxes payable | 3,352,512 | 2,310,902 | |
Due to related parties | 375,697 | 1,199,620 | |
Total Current Liabilities | 26,552,039 | 28,108,731 | |
Long term bank loans | 2,951,040 | 6,249,600 | |
Total Liabilities | 29,503,079 | 34,358,331 | |
Commitments and Contingencies | |||
Equity: | |||
Common Stock, $0.001 par value, 200,000,000 shares authorized, 22,760,000 and 18,640,000 shares issued and outstanding as of December 31, 2017 and 2016 | [1] | 22,760 | 18,640 |
Additional paid-in capital | 42,278,252 | 23,741,828 | |
Statutory reserve | 1,989,475 | 1,033,524 | |
Accumulated earnings | 5,246,950 | 224,512 | |
Accumulated other comprehensive loss | (216,414) | (1,728,096) | |
Total RETO Eco Solutions Inc. Stockholders' Equity | 49,321,023 | 23,290,408 | |
Noncontrolling interest | 2,307,727 | 5,012,260 | |
Total Equity | 51,628,750 | 28,302,668 | |
Total Liabilities and Equity | $ 81,131,829 | $ 62,660,999 | |
[1] | Retroactively restated for effect of stock recapitalization |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock authorized | 200,000,000 | 200,000,000 |
Common stock issued | 22,760,000 | 18,640,000 |
Common stock outstanding | 22,760,000 | 18,640,000 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Income Statement [Abstract] | ||||
Revenues | $ 35,551,016 | $ 32,424,269 | $ 17,384,373 | |
Cost of goods sold | 17,588,738 | 18,272,017 | 9,265,313 | |
Gross Profit | 17,962,278 | 14,152,252 | 8,119,060 | |
Operating Expenses | ||||
Selling expenses | 1,797,926 | 1,580,825 | 1,462,144 | |
General and administrative expenses | 5,308,079 | 3,878,709 | 2,607,846 | |
Research and development expenses | 603,445 | 503,688 | 458,246 | |
Total Operating Expenses | 7,709,450 | 5,963,222 | 4,528,236 | |
Income from Operations | 10,252,828 | 8,189,030 | 3,590,824 | |
Other Expense: | ||||
Interest expense | (1,012,960) | (1,450,389) | (1,032,329) | |
Other income (expense) | 166,997 | (283,205) | 92,880 | |
Total Other Expense, net | (845,963) | (1,733,594) | (939,449) | |
Income Before Income Taxes | 9,406,865 | 6,455,436 | 2,651,375 | |
Provision for Income Taxes | 2,760,080 | 1,952,356 | 295,760 | |
Net Income | 6,646,785 | 4,503,080 | 2,355,615 | |
Less: net income attributable to noncontrolling interest | 668,396 | 399,559 | 41,270 | |
Net income attributable to ReTo Eco-Solutions, Inc. | 5,978,389 | 4,103,521 | 2,314,345 | |
Net Income | 6,646,785 | 4,503,080 | 2,355,615 | |
Other Comprehensive Income (loss): | ||||
Foreign currency translation income (loss) | 2,109,103 | (1,699,975) | (905,144) | |
Comprehensive Income | 8,755,888 | 2,803,105 | 1,450,471 | |
Less: comprehensive income (loss) attributable to noncontrolling interest | 1,265,817 | (26,394) | (65,195) | |
Comprehensive income attributable to ReTo Eco-Solutions, Inc. | $ 7,490,071 | $ 2,829,499 | $ 1,515,666 | |
Earnings per share | ||||
Basic and diluted | $ 0.35 | $ 0.25 | $ 0.13 | |
Weighted average number of shares | ||||
Basic and diluted | [1] | 19,130,137 | 18,043,836 | 17,840,000 |
[1] | Retroactively restated for effect of stock recapitalization |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Total | Common Stock | Additional paid-in Capital | Statutory Reserve | Accumulated Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | |
Beginning balance at Dec. 31, 2014 | $ 14,678,235 | $ 17,840 | $ 16,453,112 | $ 102,964 | $ (5,262,794) | $ 344,605 | $ 3,022,508 | |
Beginning balance, shares at Dec. 31, 2014 | [1] | 17,840,000 | ||||||
Net income | 2,355,615 | 2,314,345 | 41,270 | |||||
Appropriations to statutory reserve | 246,699 | (246,699) | ||||||
Conversion of loan payable to common stock | 3,325,019 | 3,325,019 | ||||||
Change in noncontrolling interest in REIT Changjiang: | ||||||||
Withdrawal of capital by original minority shareholder in REIT Changjiang | (3,325,019) | (289,987) | (3,035,032) | |||||
Additional capital contribution by noncontrolling shareholder in REIT Xinyi | 48,240 | 48,240 | ||||||
Foreign currency translation adjustment | (905,144) | (798,679) | (106,465) | |||||
Acquisition of Noncontrolling interest in REIT Changjiang | 2,912,760 | 63,244 | 2,849,516 | |||||
Ending balance at Dec. 31, 2015 | 19,089,676 | $ 17,840 | 19,551,388 | 349,663 | (3,195,148) | (454,074) | 2,820,037 | |
Ending balance, shares at Dec. 31, 2015 | [1] | 17,840,000 | ||||||
Net income | 4,503,080 | 4,103,521 | 399,559 | |||||
Appropriations to statutory reserve | 683,861 | (683,861) | ||||||
Conversion of loan payable to common stock | 3,200,000 | $ 800 | 3,199,200 | |||||
Conversion of loan payable to common stock, shares | [1] | 800,000 | ||||||
Change in noncontrolling interest in REIT Changjiang: | ||||||||
Additional capital contributed by original shareholders | 991,240 | 991,240 | ||||||
Additional capital contribution by noncontrolling shareholder in REIT Xinyi | 2,218,617 | 2,218,617 | ||||||
Foreign currency translation adjustment | (1,699,975) | (1,274,022) | (425,953) | |||||
Ending balance at Dec. 31, 2016 | 28,302,668 | $ 18,640 | 23,741,828 | 1,033,524 | 224,512 | (1,728,096) | 5,012,260 | |
Ending balance, shares at Dec. 31, 2016 | [1] | 18,640,000 | ||||||
Net income | 6,646,785 | 5,978,389 | 668,396 | |||||
Appropriations to statutory reserve | 955,951 | (955,951) | ||||||
Change in noncontrolling interest in REIT Changjiang: | ||||||||
Foreign currency translation adjustment | 2,109,103 | 1,511,682 | 597,421 | |||||
Acquisition of Noncontrolling interest in REIT Changjiang | (3,300,000) | 670,350 | (3,970,350) | |||||
Private placement sale of stock | 3,600,000 | $ 900 | 3,599,100 | |||||
Private placement sale of stock, shares | [1] | 900,000 | ||||||
Share issuance - IPO, net | 14,270,194 | $ 3,220 | 14,266,974 | |||||
Share issuance - IPO, net, shares | [1] | 3,220,000 | ||||||
Ending balance at Dec. 31, 2017 | $ 51,628,750 | $ 22,760 | $ 42,278,252 | $ 1,989,475 | $ 5,246,950 | $ (216,414) | $ 2,307,727 | |
Ending balance, shares at Dec. 31, 2017 | [1] | 22,760,000 | ||||||
[1] | Retroactively restated for effect of stock recapitalization |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income | $ 6,646,785 | $ 4,503,080 | $ 2,355,615 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Gain from disposal of property and equipment | (12,598) | ||||
Deferred tax benefit | (194,045) | (44,685) | (45,448) | ||
Depreciation and amortization | 1,566,739 | 1,361,260 | 1,257,220 | ||
Bad debt provisions | 876,924 | 1,101,698 | 311,331 | ||
Changes in operating assets: | |||||
Accounts receivable | (3,174,381) | (7,451,292) | (5,353,931) | ||
Advances to suppliers | 198,355 | (1,761,639) | 1,206,987 | ||
Inventories | (207,182) | 745,161 | 353,894 | ||
Other assets | (320,500) | 6,281 | (15,751) | ||
Changes in operating liabilities: | |||||
Advances from customers | (1,328,663) | 3,028,340 | (368,457) | ||
Deferred revenue | (19,733) | (20,067) | (21,400) | ||
Accounts payable | (2,113,907) | 231,012 | 1,809,758 | ||
Billings in excess of costs and estimated earnings | (174,038) | 65,924 | |||
Taxes payable | 853,072 | 2,078,982 | 420,593 | ||
Accrued and other liabilities | (248,546) | 333,863 | (105,410) | ||
Net cash provided by operating activities | 2,534,918 | 3,937,956 | 1,858,327 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Proceeds from property and equipment disposal | 17,655 | ||||
Addition of property, equipment and construction in progress | (4,639,003) | (9,372,067) | (2,709,343) | ||
Purchase of intangible assets | (1,681,870) | ||||
Deposit made for planned acquisition of minority interest | (565,000) | ||||
Acquisition of minority interest | (2,735,000) | ||||
Collection (payment) on project deposit | 2,317,700 | (2,471,700) | |||
Net cash used in investing activities | (7,374,003) | (9,301,237) | (5,163,388) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Proceeds from short-term bank loans | 9,767,793 | 7,597,297 | |||
Deferred financing costs paid | (98,774) | ||||
Proceeds from long-term bank loans | 752,500 | 5,617,500 | |||
Repayment of short-term bank loans | (8,244,905) | (6,772,500) | (4,250,197) | ||
Repayment of long-term bank loans | (3,799,654) | (1,962,331) | (3,624,960) | ||
Proceeds from (repayment of) bank notes, net | (739,984) | 802,500 | |||
Proceeds received from stock issuance for reorganization | 4,457,500 | ||||
Payments to original shareholders of Beijing REIT | (3,466,260) | ||||
Proceeds from investor loan | 3,200,000 | ||||
Gross proceeds from Initial Public Offering - stock issuance | 16,100,000 | ||||
Direct costs disbursed from Initial Public Offering proceeds | (1,829,806) | ||||
Proceeds from private placement sale of stock | 3,600,000 | ||||
Proceeds from (repayment of) related party loans, net | (854,401) | 817,495 | 424,019 | ||
Capital contribution from noncontrolling shareholders | [1] | 2,218,617 | [1] | 2,912,760 | |
Change in restricted cash, net | 236,795 | (90,300) | (160,500) | ||
Net cash provided by financing activities | 14,235,838 | 6,653,244 | 1,721,122 | ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (128,307) | (227,996) | 85,022 | ||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 9,268,446 | 1,061,967 | (1,498,917) | ||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 1,594,594 | 532,627 | 2,031,544 | ||
CASH AND CASH EQUIVALENTS, END OF YEAR | 10,863,040 | 1,594,594 | 532,627 | ||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||
Interest paid | 997,948 | 1,430,901 | 1,237,325 | ||
Income tax paid | 1,903,343 | 719,479 | 34,867 | ||
Non-Cash Financing Activities | |||||
Conversion of investor loan to equity | 3,200,000 | 3,325,019 | |||
Withdrawal of capital by original minority shareholder in REIT Changjiang | $ (3,325,019) | ||||
[1] | In July 2015, Beijing REIT established a new subsidiary REIT Xinyi wherein Beijing REIT owns 70% equity interest. Another noncontrolling shareholder contributed RMB 300,000 (equivalent to $48,240) in cash as of December 31, 2015 as well as a land use right of 206,667 square meters to exchange for 30% ownership interest in REIT Xinyi. The contribution of land use right as registered capital was pending approval by the local government as of December 31, 2015. Thus, no fair value of the land use right was recorded as assets or minority interest. In 2016, the contribution of land use right as the registered capital was not approved. On October 28, 2016, Beijing REIT and Xinyi Transportation signed an amendment to change Xinyi Transportation's capital contribution from land use right to cash. Pursuant to the amendment signed on October 28, 2016 to the Collaboration Agreement signed on November 17, 2014 between Beijing REIT and its noncontrolling shareholder, all capital contribution should be in the form of cash. In November 2016, the noncontrolling shareholder made total cash contributions of RMB 15,000,000 (approximately $2,218,617) into REIT Xinyi instead of the land right contribution. |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization and Description of Business [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS ReTo Eco-Solutions, Inc. (“RETO” or the “Company”) is a limited liability company established under the laws of the British Virgin Islands on August 7, 2015 as a holding company to develop business opportunities in the People’s Republic of China (“PRC” or “China”). RETO owns 100% equity interest of REIT Holdings (China) Limited (“REIT Holdings”), a limited liability company established in Hong Kong. Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”) was established on May 12, 1999 under the laws of PRC, with the registered capital of RMB 24 million (approximately $3.5 million) and additional paid in capital of RMB 100 million (approximately $15.4 million) contributed by four individual shareholders. Over the years, Beijing REIT has established five other subsidiaries consisting: Gu’an REIT Machinery Manufacturing Co., Ltd. (“Gu’an REIT”) was incorporated on May 12, 2008; Beijing REIT Eco Engineering Technology Co., Ltd. (“REIT Eco Engineering”) was incorporated on April 24, 2014; Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd. (“Ruirong”) was incorporated on May 12, 2014; Nanjing Dingxuan Environment Protection Technology Development Co., Ltd. (“Dingxuan”) was incorporated on October 17, 2014; and REIT Technology Development (America), Inc. (“REIT US”) was incorporated on February 27, 2014. Gu’an REIT is the main operating entity focusing on the development and distribution of specialized equipment for industrial waste processing. Ruirong manufactures parts and accessories used in specialized equipment to manufacture construction materials, while the other subsidiaries are relatively new and have limited activities. On February 7, 2016, Beijing REIT and its individual original shareholders entered into an equity transfer agreement, pursuant to which these shareholders agreed to transfer all of their ownership interests in Beijing REIT with a carrying value of RMB 24 million (or $3,466,260) to REIT Holdings (the “Transfer”) (see Note 15). After this equity transfer, Beijing REIT became a Wholly Foreign-Owned Enterprise (“WOFE”) and amended the registration with the State Administration for Industry and Commerce (“SAIC”) on March 21, 2016. As part of this equity transfer, the Company issued a total of 17,830,000 of its common shares at $0.25 per share to all of the Company’s original shareholders or former shareholders in Beijing REIT. Among total proceeds of $4,457,500 from the share issuance, the Company paid $3,466,260 (approximately RMB 24 million) to the original shareholders of Beijing REIT as the consideration for the transfer of their equity interests in Beijing REIT. Since these shares were issued to the original shareholders of Beijing REIT, the transaction is considered as a part of the reorganization. The Company believes it is appropriate to reflect these share issuances as nominal stock issuance on a retroactive basis similar to stock split pursuant to ASC 260. The Company has retroactively adjusted all shares and per share data for all the periods presented. REIT Mingsheng Environmental Protection Construction Materials (Changjiang) Co., Ltd. (“REIT Changjiang”) was incorporated in Hainan Province, China, on November 22, 2011 with the original registered capital of RMB 100 million (approximately $16 million). REIT Changjiang is engaged in hauling and processing construction and mining waste, with which it produces recycled aggregates and bricks for environmental-friendly uses. On January 10, 2016, Zhongrong Huanneng Investment (Beijing) Co., Ltd. (“Zhongrong”) signed an equity transfer agreement with Beijing REIT, pursuant to which the shareholders of Zhongrong agreed to transfer all of its equity interests held on behalf of four individual shareholders in REIT Changjiang to Beijing REIT. At the time of the transfer, REIT Changjiang was controlled in majority (84.32%) by the same four individual shareholders as those of Beijing REIT. Zhongrong and Beijing REIT are considered under common control since they are owned by the same four individual shareholders. As a result of the above transaction, Beijing REIT holds an 84.32% equity interest in REIT Changjiang and Venture Business International (“VBI”), a British Virgin Islands company holds the remaining 15.68% interest. For accounting purposes, the above mentioned transactions were accounted for in a manner similar to a recapitalization. RETO and its wholly owned subsidiary REIT Holdings, which now owns all of the interests of Beijing REIT, as well as REIT Changjiang which were effectively controlled by the same majority shareholders of Beijing REIT. Therefore, RETO, REIT Holdings, Beijing REIT and REIT Changjiang are all considered under common control. Accordingly, the consolidation of Beijing REIT and REIT Changjiang into RETO has been accounted for at carrying value and prepared on the basis as if the aforementioned reorganization had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. During the year ended December 31, 2016, REIT Holdings made a deposit of $565,000 to VBI with the intention to acquire VBI’s 15.68% non-controlling equity interest in REIT Changjiang for $3.3 million. The transaction was completed as of December 31, 2017. As a result, REIT Changjiang is now a wholly owned subsidiary of the Company. On June 1, 2015, Hainan REIT Construction Project Co., Ltd. (“REIT Construction”) was incorporated as a wholly owned subsidiary of REIT Changjiang. On July 15, 2015, Bejing REIT established a new subsidiary, REIT Xinyi New Material Co., Ltd. (“REIT Xinyi”) wherein Beijing REIT owns 70% equity interest, with the remaining 30% owned by a noncontrolling shareholder. In February 2016, Beijing REIT established a joint venture, REIT Q GREEN Machines Private Limited (“REIT India”), together with an Indian company Q Green Techcon Private Limited (“Q Green”). Beijing REIT owns 51% equity interest of REIT India. On March 2, 2017, Xinyi REIT Ecological Technology Co, Ltd (“REIT Ecological”) was incorporated as a wholly owned subsidiary of REIT Holdings. On December 14, 2017, Horgos Ta-REIT Environment Technology Co., Ltd., (“Horgos Ta-REIT”) was incorporated as a wholly owned subsidiary of REIT Eco Engineering. The Company, through its subsidiaries, is a manufacturer and distributor of environmental-friendly construction materials, made from industrial and construction waste, as well as equipment used for production of these materials. In December 2016, the Company issued 900,000 common shares to an unrelated investor, at a price of $4 per share for a total of $3,600,000. As of December 31, 2016, the Company had not received the funds from the investor and the shares were held in escrow. The Company received the funds from the investor on September 17, 2017 and the shares were released from escrow. On November 29, 2017, the Company completed its initial public offering (“IPO”) of 3,220,000 shares of its common stock at a public offering price of $5.00 per share. The gross proceeds from the offering were approximately $16.1 million before deducting placement agents’ commissions and other offering expenses, resulting in net proceeds of approximately $14.3 million. In connection with the offering, the Company’s common stock began trading on the NASDAQ Capital Market beginning on November 29, 2017 under the symbol “RETO”. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements of the Company reflect the principal activities of the entities listed below. All inter-company balances and transactions have been eliminated upon consolidation. Name of the entity Place of Ownership ReTo Eco-Solutions, Inc. (“RETO”) British Virgin Islands Parent REIT Holdings (China) Limited (“REIT Holdings”) Hong Kong, China 100 % Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”) Beijing, China WFOE,100 % Gu’an REIT Machinery Manufacturing Co., Ltd. (“Gu’an REIT”) Gu’an, China 100 % REIT Mingsheng Environment Protection Construction Materials (Changjiang) Co., Ltd. (“REIT Changjiang”) Changjiang, China 100 % Beijing REIT Eco-Engineering Technology Co., Ltd. (“REIT Technology”) Beijing, China 100 % Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd. (“Ruirong”) Langfang, China 100 % Hainan REIT Construction Project Co., Ltd. (“REIT Construction”) Haikou, China 100 % REIT Xinyi New Materials Co., Ltd. (“REIT Xinyi”) Xinyi, China 70 % Nanjing Dingxuan Environmental Protection Technology Development Co., Ltd. (“Dingxuan”) Nanjing, China 100 % REIT Technology Development (America), Inc. (“REIT US”) California, U.S.A 100 % REIT Q GREEN Machines Private Limited (“REIT India”) India 51 % Xinyi REIT Ecological Technology Co, Ltd (“REIT Ecological”) Xinyi, China 100 % Horgos Ta-REIT Environment Technology Co., Ltd., (“Horgos Ta-REIT”) Horgos, China 100 % Noncontrolling interests As of December 31, 2017, noncontrolling interests represent the noncontrolling shareholders’ proportionate share of equity interests in REIT Xinyi and REIT India. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition under the percentage of completion method, and realization of deferred tax assets. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs. Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure short-term bank notes payable and bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. Upon the maturity of the bank acceptance notes and bank borrowings, the Company is required to deposit the remainder to the escrow account to settle the bank notes payable and bank borrowings. The notes payable and bank borrowings are generally short term in nature due to their short maturity period of three months to one year; thus, restricted cash is classified as a current asset. As of December 31, 2017 and 2016, the Company had restricted cash of $0 and $230,400, respectively, related to the bank acceptance notes payable. Accounts Receivable, net Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers with good credit standing with a maximum of 180 days and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on the assessment of customers’ credit and ongoing relationships, the Company’s payment terms typically range from 90 days to 1 year. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Inventories Inventories are stated at the lower of cost or net realizable value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Advances to Suppliers Advances to suppliers consist of balances paid to suppliers for services and materials that have not been provided or received. Advances to suppliers are short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance for uncollectible balances amounted to $534,245 and $542,151 as of December 31, 2017 and 2016, respectively. Property, Plant and Equipment Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Property 30–50 years Machinery equipment 5–15 years Transportation vehicles 5–10 years Office equipment and furniture 3–5 years Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. Construction-in-Progress (“CIP”) Construction-in-progress represents property and buildings under construction and consists of construction expenditures, equipment procurement, and other direct costs attributable to the construction. Construction-in-progress is not depreciated. Upon completion and ready for intended use, construction-in-progress is reclassified to the appropriate category within property, plant and equipment. Intangible Assets Intangible assets consist primarily of land use rights and software. Under the PRC law, all land in the PRC is owned by the government and cannot be sold to an individual or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. These land use rights are sometimes referred to informally as “ownership”. Land use rights are stated at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Items Useful life Land use rights 45-49 years Software 10 years Impairment of Long-lived Assets The Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets recorded for the years ended December 31, 2017, 2016 and 2015. Fair Value of Financial Instruments ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets and liabilities. ● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advance to suppliers, accounts payable, accrued and other liabilities, advances from customers, deferred revenue, taxes payable and due to related parties to approximate the fair value of the respective assets and liabilities at December 31, 2017 and 2016, based upon the short-term nature of the assets and liabilities. The Company believes that the carrying amount of the short-term and long-term borrowings approximates fair value at December 31, 2017 and 2016 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates. Revenue Recognition The Company currently generates its revenues from the following main sources: ● Revenue from machinery and equipment sales The Company provides installation service in connection with product sales. The Company evaluates them as a single arrangement and determines whether the arrangement contains more than one unit of accounting in accordance with the standard ASC 605, “Multiple-Deliverable Revenue Arrangement”. An arrangement is separated, if (1) the delivered element(s) has (have) value to the customer on a stand-alone basis and (2) if the arrangement includes a general right of return relative to the delivered element(s), delivery or performance of the undelivered element(s) is (are) considered probable and substantially in the control of the Company. If both criteria are fulfilled, the appropriate revenue recognition convention is then applied to each separate unit of accounting. Generally, the total arrangement consideration is allocated to the separate units of accounting based on their relative fair values. Reliable fair values are sales prices for the component when it is regularly sold on a stand-alone basis, third-party prices for similar components or, under certain circumstances, cost plus, an adequate business specific profit margin related to the relevant element. If the criteria are not met, revenue is deferred until such criteria are met or until the period in which the last undelivered element is delivered. The amount allocable to the delivered elements is limited to the amount that is not contingent upon delivery of additional elements or meeting other specified performance conditions. The Company considers the installation and product sales as single delivered element based on the fact that there are no other third parties who can provide installation service for the equipment the Company sells in the market and the delivered machinery and equipment have little to no value to the customers without the installation service. In addition, the Company does not provide any installation service to its customers without product sales. Thus there is no reliable fair value for the installation service on a stand-alone basis. Accordingly, the revenue is recognized when the product is delivered and installation is completed since the criteria for multiple-deliverable revenue arrangements in ASC 605 are not met. The Company allows certain customers to retain approximately 5-20% of the agreed purchase or installation price as security retention for one year after the Company delivers products and provides services. The Company considers this one-year term as a warranty period for the Company’s products sold and services rendered. Revenue was recognized when the product is delivered and installation is completed and security retention was recorded in account receivable on our balance sheets. Historically, the Company has not experienced significant customer complaints on products sold or services provided. No customers have claimed damages for any loss incurred due to quality problems. Therefore, no separate warranty provisions were provided as of December 31, 2017 and 2016 based on historical experience. As of December 31, 2017 and 2016, there were $557,919 and $787,518 related to the security retention included in the account receivable balance, respectively. ● Revenue from construction materials sales Revenue from sales of construction materials is recognized, net of estimated provisions for sales allowances, when the products are shipped and title is transferred. Revenue is recognized when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists (sales agreements and customer purchase orders are used to determine the existence of an arrangement); (ii) delivery of goods has occurred and risks and benefits of ownership have been transferred, which is when the goods are received by the customer at its designated location in accordance with the sales terms; (iii) the sales price is both fixed and determinable, and (iv) collectability is reasonably assured. Historically, sales returns have been minimal. ● Revenue from municipal construction projects Revenue for construction contract was recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to estimated total costs for the contract. Contract costs included all direct material, labor costs, equipment and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. General and administrative costs were charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Revenue recognized from construction projects was $250,422 and $0 for the years ended December 31, 2017 and 2016, respectively. For the year ended December 31, 2015, the Company recognized revenue of $1,249,699 from the contract when the project was completed. Revenue from claims and unapproved change orders is recorded only to the extent that contract costs relating to the claim have been incurred and the amounts have been received or awarded. For the years ended December 31, 2017, 2016 and 2015, no revenue has been recognized from claims or unapproved change orders. ● Revenue from technological consulting and other services Revenues from technological consulting and other services are recognized when services are rendered and contract amounts are earned. Shipping and Handling Proceeds collected from customers for shipping and handling costs are included in revenues. Shipping and handling costs are expensed as incurred and are included in operating expenses, as a part of selling, and general and administrative expenses, in the Company’s consolidated statements of income and comprehensive income. Total shipping and handling expenses were $776,438, $630,218 and $586,707 for the years ended December 31, 2017, 2016 and 2015, respectively. Income Taxes The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. To the extent applicable, the Company records interest and penalties as a general and administrative expense. The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the years ended December 31, 2017, 2016 and 2015. As of December 31, 2017, the tax years ended December 31, 2013 through December 31, 2017 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. Value added tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying consolidated financial statements. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. Accounting for changes in ownership As of December 31, 2017, the Company completed the acquisition of a 15.68% noncontrolling interest in its subsidiary REIT Changjiang. In accordance with ASC 810 “Consolidation”, changes in a parent’s ownership while the parent retains its controlling financial interest in its subsidiary should be accounted for as an equity transaction. Therefore, no gain or loss is recognized in consolidated net income (loss) or comprehensive income (loss). The carrying amount of the controlling and non-controlling interest is adjusted to reflect the change in its ownership interest in the subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is recognized in equity attributable to the parent. If a change in a parent’s ownership interest occurs in a subsidiary that has accumulated other comprehensive income, the carrying amount of accumulated other comprehensive income is adjusted to reflect the change in the ownership interest in the subsidiary through a corresponding charge or credit to equity attributable to the parent. Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended December 31, 2017, 2016 and 2015, the Company had no dilutive security outstanding that could potentially dilute EPS in the future. Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in the results of operations. The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: December 31, December 31, December 31, Year-end spot rate US$1=RMB 6.5062 US$1= RMB 6.9448 US$1= RMB 6.4917 Average rate US$1=RMB 6.7568 US$1= RMB 6.6441 US$1= RMB 6.2288 Concentrations and Credit Risk A majority of its expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to effectuate the remittance. The Company maintains certain bank accounts in the PRC, Hong Kong and BVI, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of December 31, 2017 and 2016, $2,018,199 and $1,581,404 of the Company’s cash and cash equivalents was on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. The cash balance held in the Hong Kong bank accounts was $51,634 and $8,730 as of December 31, 2017 and 2016, respectively. The cash balance held in BVI bank accounts was $8,774,608 and $199,079 as of December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, the Company held $3,356 and $146 of cash balances within the United States, respectively, which was below the FDIC insurance limits of $250,000. Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company’s sales are made to customers that are located primarily in China. The Company has a concentration of its revenues and receivables with specific customers. For the years ended December 31, 2017, 2016 and 2015, no customer accounted for more than 10% of the Company’s total revenue. As of December 31, 2017, and 2016, none of account receivable accounted for more than 10% of the total outstanding accounts receivable balance, As of December 31, 2015, one account receivable accounted for 12% of the total outstanding accounts receivable balance. For the years ended December 31, 2017, 2016 and 2015, the Company purchased approximately 31 %, 41% and 39% of its raw materials from one major supplier, respectively. Advanced payments to three major vendors accounted for 23%, 17% and 16% of the total advance payments outstanding as of December 31, 2017. Advanced payments to three major vendors accounted for 23%, 16% and 14% of the total advance payments outstanding as of December 31, 2016. Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. Reclassifications In connection with the retroactively restatement for effect of stock recapitalization, certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, In September 2017, the FASB has issued ASU No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASC 606 as of January 1, 2018, under the modified retrospective method where the cumulative effect is recognized at the date of initial application. The Company has evaluated the impact of ASC 606 and has determined that fixed-price contracts, which comprise substantially all of the Company’s revenue, will most often represent a single performance obligation. The Company determined the impact of the adoption on both revenue recognition for sales of product and installation contracts to be immaterial on its consolidated financial statements and disclosures. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”) to provide guidance for recognizing gains and losses from the transfer of nonfinancial assets and in-substance nonfinancial assets in contracts with non-customers, unless other specific guidance applies. The standard requires a company to derecognize nonfinancial assets once it transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial asset. Additionally, when a company transfers its controlling interest in a nonfinancial asset, but retains a noncontrolling ownership interest, the company is required to measure any noncontrolling interest it receives or retains at fair value. The guidance requires companies to recognize a full gain or loss on the transaction. As a result of the new guidance, the guidance specific to real estate sales in |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 3 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following: December 31, December 31, Trade accounts receivable $ 20,319,213 $ 15,948,216 Less: allowances for doubtful accounts (1,815,927 ) (741,187 ) Accounts receivable, net $ 18,503,286 $ 15,207,029 |
Advances to Suppliers, Net
Advances to Suppliers, Net | 12 Months Ended |
Dec. 31, 2017 | |
Advances to Suppliers, Net [Abstract] | |
ADVANCES TO SUPPLIERS, NET | NOTE 4 – ADVANCES TO SUPPLIERS, NET Advances to suppliers include prepayments for raw materials used for production, construction materials for the Company’s construction projects, as well as prepayment for the Company’s construction subcontractors. December 31, December 31, Raw material prepayments for equipment production $ 916,210 $ 728,429 Construction material prepayments 1,037,338 1,263,942 Prepayment to construction subcontractors 428,334 432,188 Subtotal 2,381,882 2,424,559 Less: allowances for doubtful accounts (534,245 ) (542,151 ) Advances to suppliers, net $ 1,847,637 $ 1,882,408 Our suppliers generally require prepayments from us before delivery of goods or service. It usually takes 3 to 6 months for the suppliers to deliver raw material for our equipment production and takes up to 6 to 12 months for the suppliers to deliver the construction materials. The prepayment is necessary to secure the supply in the market or secure a favorable price. |
Inventory, Net
Inventory, Net | 12 Months Ended |
Dec. 31, 2017 | |
Inventory, Net [Abstract] | |
INVENTORY, NET | NOTE 5 – INVENTORY, NET Inventories consisted of the following: December 31, December 31, Raw materials $ 1,069,130 $ 910,950 Finished goods 542,706 397,576 Total inventory $ 1,611,836 $ 1,308,526 No inventory reserves were recorded for the years ended December 31, 2017 and 2016. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 6 - PREPAID EXPENSES AND OTHER CURRENT ASSETS The Company’s prepaid expenses and other current assets are as follows: December 31, December 31, Other receivable (1) $ 607,822 $ 294,233 Prepaid rent expense (2) 75,943 174,830 Value added tax receivable 86,289 59,385 Auction bidding deposit and others 4,611 2,879 Total 774,665 531,327 Less current portion (774,665 ) (356,498 ) Total noncurrent portion $ - $ 174,829 (1) Other receivables mainly represent mainly advances to employees for business development purposes and prepaid employee insurance and welfare benefit which will be subsequently deducted from the employee payroll. (2) The Company’s subsidiary Beijing REIT leases headquarter offices of 658 square meters from March 1, 2011 to August 30, 2018, and prepaid rent expense to the landlord, which is amortized over the lease term. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment, Net [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: December 31, 2017 December 31, 2016 Property and buildings $ 28,336,864 $ 26,548,526 Machinery and equipment 4,041,418 3,020,150 Automobiles 925,945 667,639 Office and electric equipment 833,105 745,392 Subtotal 34,137,332 30,981,707 Construction in progress (“CIP”) 11,281,422 7,045,919 Less: accumulated depreciation (5,585,474 ) (3,867,296 ) Property and equipment, net $ 39,833,280 $ 34,160,330 Depreciation expense was $1,403,585, $1,185,476 and $1,119,985 for the years ended December 31, 2017, 2016 and 2015, respectively. The Company’s construction in progress consisted of the following components: December 31, December 31, Land improvement costs on REIT Xinyi’s new manufacturing plant (a) $ 11,281,422 $ 7,045,919 Total CIP $ 11,281,422 $ 7,045,919 (a) In 2015, the Company formed a new subsidiary REIT Xinyi together with a 30% noncontrolling interest shareholder Xinyi Transportation Investment Co., Ltd. (“Xinyi Transportation”) and plans to construct a new manufacturing plant on a 206,667 square meters land, to produce concrete cutting machines and eco-friendly construction materials for road pavement and building construction use. Total budgeted investment for the whole project is RMB 800 million (approximately $118 million). The Company started the land improvement in late 2015 and plant construction in 2016. Total plant construction was budgeted at approximately $13 million. As of December 31, 2017, the Company already invested approximately $11.3 million on the plant construction and will invest additional approximately $1.7 million to fully complete the plant construction by May 2018(See Note 13). |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS, NET | NOTE 8 – INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: December 31, December 31, Land use rights $ 8,145,824 $ 7,630,879 Software 33,541 31,470 Total 8,179,365 7,662,349 Less: accumulated amortization (777,815 ) (569,979 ) Intangible assets, net $ 7,401,550 $ 7,092,370 As of December 31, 2017 and 2016, land use right of 306,000 square meters with a carrying value of approximately $5.3 million and $7.1 million, respectively, was pledged with the bank as collateral for the Company’s long-term bank loan (see Note 11). Amortization expense was $163,154, $175,784 and $137,225 for the years ended December 31, 2017, 2016 and 2015, respectively. Estimated future amortization expense is as follows: Twelve month ending December 31, Amortization expense 2018 $ 169,386 2019 169,368 2020 169,350 2021 169,135 2022 168,919 Thereafter 6,555,392 $ 7,401,550 |
Short-Term Bank Loans
Short-Term Bank Loans | 12 Months Ended |
Dec. 31, 2017 | |
Short-Term Bank Loans/Bank Note Payable [Abstract] | |
SHORT-TERM BANK LOANS | NOTE 9 – SHORT-TERM BANK LOANS Short-term loans consisted of the following: December 31, December 31, China Merchants Bank (“CMB”) (1) $ 3,074,000 $ 2,880,000 Beijing Bank (“BJB”) (2) 4,611,000 2,854,666 Haikou United Bank (“HUB”) (3) 122,960 - Deferred financing costs (267,579 ) - Total $ 7,540,381 $ 5,734,666 (1) On June 16, 2016, the Company’s subsidiary, Beijing REIT, entered into a line of credit agreement with CMB Beijing Huizhong Beili Branch to borrow an aggregate of RMB 20 million (approximately $2.88 million as of December 31, 2016) as working capital for one year with a due date on June 16, 2017. These loans borrowed under this line of credit agreement were fully repaid upon maturity. The Company subsequently renewed this line of credit with CMB to borrow the same amount of RMB 20 million as working capital for another year. The difference in the US dollar amounts is due to the change of exchange rates. The loans borrowed under this line of credit agreement bear variable interest rates based on the prevailing interest rates set by the People’s Bank of China at the time of borrowing, plus 10 basis points. The effective rate is 5.655% per annum. These loans are guaranteed by the third-party guaranty company as well as by the Chairman and Chief Executive Officer of the Company. (2) In May, August, and December 2016, Beijing REIT entered into a series of loan agreements with BJB to borrow an aggregated of RMB 20.51 million ($2,854,666) as working capital for a period of six months to one year with annual interest rate of 4.785%. These loans have been repaid upon maturity. The loan was guaranteed by the third-party guaranty company as well as the principal shareholders of the Company. In January, April, July and October 2017, Beijing REIT entered into new loan agreements with BJB to borrow an aggregated of RMB 30 million ($4,611,000) as working capital for a period of six months to one year with respective maturity dates. Three of these loans bear fixed interest rates ranging from 4.785% to 5.655% per annum and one bears a variable interest rate based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing, plus 20 basis points with the effective rate of 5.22% per annum. All these loans are either guaranteed by a third-party guaranty company and/or the principal shareholders of the Company. Of these RMB 30 million loans borrowed in 2017, RMB 10 million ($1,537,000) have been repaid as of the date of this report. The remaining will be repaid upon their respective maturity date in 2018. (3) On January 24, 2017, the Company’s subsidiary, REIT Changjiang entered into a short-term bank loan agreement with Haikou United Bank to borrow RMB 1 million (approximately $153,700) as working capital for one year. The loan bears a fixed interest rate of 9% per annum. REIT Changjiang pledged its property with a carrying value of RMB 1.5 million as collateral. The loan is also guaranteed by the principal shareholders of the Company. During the year ended December 31, 2017, the Company repaid RMB 200,000 (approximately $30,740). The remaining loan has been fully repaid upon maturity in 2018. For the years ended December 31, 2017, 2016 and 2015, interest expense on all short-term bank loans amounted to $365,964, $635,875 and $350,148, respectively. |
Bank Note Payable
Bank Note Payable | 12 Months Ended |
Dec. 31, 2017 | |
Short-Term Bank Loans/Bank Note Payable [Abstract] | |
BANK NOTE PAYABLE | NOTE 10 – BANK NOTE PAYABLE The Company’s bank notes payable consisted of the following: December 31, December 31, 2017 2016 Beijing Bank (“BJB”) $ - $ 720,000 Total $ - $ 720,000 On December 20, 2016, Beijing REIT entered into a bank note bill agreement with BJB to borrow RMB 5 million (equivalent to $720,000 as of December 31, 2016) as working capital for six months (from December 20, 2016 to June 20, 2017), with an interest rate of 5.6% per annum. The bank note was guaranteed by a third-party guaranty company. The Company was also required to deposit RMB 1 million (equivalent to $144,000) as restricted cash to guarantee this bank note. The note was fully repaid upon maturity in 2017. For the years ended December 31, 2017, 2016 and 2015, interest expense on the Company’s bank notes payable amounted to $44,310, $59,839 and $45,717, respectively. |
Long Term Bank Loans
Long Term Bank Loans | 12 Months Ended |
Dec. 31, 2017 | |
Long Term Bank Loans [Abstract] | |
LONG TERM BANK LOANS | NOTE 11 – LONG TERM BANK LOANS December 31, December 31, Long-term bank loan - Industrial and Commercial Bank of China (“ICBC”) (1) $ 7,411,564 $ 9,920,860 Long-term bank loan – Changjiang Agriculture Credit Union (“CACU”) (2) - 720,000 Subtotal 7,411,564 10,640,860 Less: current maturities of long-term loan (4,460,524 ) (4,391,260 ) Long-term loan-noncurrent portion $ 2,951,040 $ 6,249,600 (1) In September 2013, the Company’s subsidiary, REIT Changjiang, entered into a line of credit agreement with ICBC, which allowed REIT Changjiang to borrow up to RMB 96 million (approximately $13.8 million) from ICBC for six years. The loan is used in the construction of REIT Changjiang’s manufacturing plant. The loan bears a variable interest rate based on the prevailing interest rate for a 6-year loan set by the People’s Bank of China at the time of borrowing, plus 29 basis points, adjusted every six months. The Company pledged its land use right of 306,000 square meters and the construction in progress on this land with an aggregated carrying value of $28,463,526 at December 31,2017 as collateral for this loan. The Company is required to make monthly principal and interest payments. During the year ended December 31, 2017, the Company repaid RMB 20,673,882 with a remaining balance of RMB 48,220,976 (equivalent to $7,411,564) as of December 31, 2017. (2) On December 15, 2016, REIT Changjiang entered into a loan agreement with CACU to borrow $720,000 as working capital for two years with a fixed interest rate of 8% per annum. The Company pledged its equipment as the collateral. The loan was guaranteed by the CEO and principal shareholders of the Company. The Company was required to make monthly interest payments with principal due at maturity. The Company fully repaid the loan in 2017. For the years ended December 31, 2017, 2016 and 2015, total interest on the Company’s long-term bank loans amounted to $585,158, $795,025 and $1,151,267, among which $0, $0 and $469,086 has been capitalized and $585,158, $795,025, and $682,181 has been charged to interest expense, respectively. As of December 31, 2017, the repayment schedule of the Company’s remaining long-term bank loan is as follows: Repayment in RMB Repayment in USD March 2018 19,420,976 2,985,004 September 2018 9,600,000 1,475,520 March 2019 9,600,000 1,475,520 September 2019 9,600,000 1,475,520 Total 48,220,976 7,411,564 |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Taxes [Abstract] | |
TAXES | NOTE 12 – TAXES (a) Corporate income taxes The Company is subject to income taxes on an entity basis on income arising in or derived from the location in which each entity is domiciled. RETO is incorporated in the British Virgin Islands and is exempt from paying income tax. REIT Holdings is registered in Hong Kong as a holding company. The Company’s operating subsidiaries are all incorporated in the PRC and are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the Corporate Income Tax Law of PRC, corporate income tax rate applicable to all companies, including both domestic and foreign-invested companies, is 25%. However, Beijing REIT is recognized as a High-technology Company by Chinese government and subject to a favorable income tax rate of 15%. In addition, since the products manufactured by REIT Changjiang qualify as eco-friendly construction materials, 10% of its revenue can be exempt from income tax for the year ended December 31, 2015. REIT Changjiang did not receive such exemption for the year ended December 31, 2017 and 2016. Nanjing Dingxuan primarily provides technological services to customers, based on local tax regulation, its taxable income was assessed at 10% of its revenue for both years ended December 31, 2016 and 2015. Nanjing Dingxuan did not receive such favorable income tax rate for the year ended December 31, 2017. The estimated tax savings as a result of the Company’s preferred tax rates for the years ended December 31, 2017, 2016 and 2015 amounted to $266,125, $196,303 and $369,478, respectively. Per share effect of the tax exemption were $0.01, $0.01 and $0.02 for the years ended December 31, 2017, 2016 and 2015, respectively. The following table reconciles the statutory rate to the Company’s effective tax rate: For the Years ended December 31, 2017 2016 2015 China Statutory income tax rate 25.0 25.0 25.0 Effect of favorable income tax rate in certain entity in PRC (2.8 ) (3.0 ) (13.9 ) Non-PRC entities not subject to PRC tax (3) 4.5 3.0 1.1 Research &Development (“R&D”) tax credit (1) (0.3 ) (0.5 ) (1.5 ) Non-deductible expenses-permanent difference (2) 0 1.1 0.3 Change in valuation allowance 2.9 4.6 0.2 Effective tax rate 29.3 % 30.2 % 11.2 % (1) According to PRC tax regulations, 150% of current year R&D expense approved by the local tax authority may be deducted from tax income. (2) Represents expenses incurred by the Company that were not deductible for PRC income tax. (3) Represents the tax losses incurred from operations outside of China. The breakdown of the Company’s income before income tax expense is as follows: For the Years ended December 31, 2017 2016 2015 Income before income tax expense from China 11,136,874 7,252,723 2,764,578 Loss before income tax expense from outside of China (1,730,009 ) (797,287 ) (113,203 ) Total 9,406,865 6,455,436 2,651,375 Loss before income tax expense from outside of China represents the losses incurred in ReTo, REIT Holdings and REIT US, which are mainly holding companies incorporated outside of China. The income tax provision (benefit) for the years ended December 31, 2017, 2016 and 2015 were as follows: For the Years ended December 31, 2017 2016 2015 Current 2,954,130 1,997,042 341,208 Deferred (194,050 ) (44,686 ) (45,448 ) Total 2,760,080 1,952,356 295,760 Deferred income taxes reflect the net effects of temporary difference between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. The Company’s deferred tax assets as of December 31, 2017 and 2016 were $296,535 and $89,015, respectively, which were derived from the temporary difference from provision for doubtful accounts. The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The increases in valuation allowance for the years ended December 31, 2017 and 2016 was approximately $283,160 and $295,000. Deferred tax asset December 31 December 31, Provision of doubtful accounts $ 296,535 $ 89,015 Tax loss carried forwards 1,729,036 1,445,876 Valuation allowance on tax losses (1,729,036 ) (1,445,876 ) $ 296,535 $ 89,015 (b) Value added tax The Company is subject to a value added tax (“VAT”) for selling merchandise. The applicable VAT rate is 17% for products sold in the PRC. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued. (c) Taxes Payable The Company’s taxes payable consists of the following: December 31, December 31, 2017 2016 VAT tax payable $ 191,284 $ 461,107 Corporate income tax payable 2,927,254 1,596,874 Land use tax and other taxes payable 233,974 252,921 Total $ 3,352,512 $ 2,310,902 |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2017 | |
Commitments [Abstract] | |
COMMITMENTS | NOTE 13 – COMMITMENTS Lease Obligation The Company’s subsidiaries lease office spaces under operating leases. Operating lease expense amounted to $89,785, $196,330 and $264,696 for the years ended December 31, 2017, 2016 and 2015. Future minimum lease payments under non-cancelable operating leases are as follows: Twelve month ending December 31, 2018 $ 68,044 2019 10,360 2020 10,360 2021 10,360 2022 5,180 Total $ 104,304 Capital commitments In 2015, the Company formed a new subsidiary REIT Xinyi together with a 30% noncontrolling interest shareholder Xinyi Transportation and plans to construct a new manufacturing plant on a 206,667 square meters land, to produce concrete cutting machines and eco-friendly bricks for road pavement and building construction use. The plant is expected to be fully completed by May 2018 (See Note 7). As of December 31, 2017, the remaining capital commitment was approximately $1.7 million for the related plant construction. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 14 – RELATED PARTY TRANSACTIONS As of December 31, 2017 and 2016, the balances due to related parties were as follows: December 31, December 31, Mr. Hengfang Li - (1) $ 375,697 $ 1,199,620 Total $ 375,697 $ 1,199,620 As of December 31, 2017 and 2016, the acquisition deposit made to related parties were as follows: December 31, December 31, Shareholder of noncontrolling interest –Venture Business International Limited (“VBI”) - (2) $ - $ 565,000 Total $ - $ 565,000 (1) Mr. Hengfang Li is the Chief Executive Officer (“CEO”) and major shareholder of the Company. Mr. Li periodically provides working capital loans to support the Company’s operations when needed. (2) As of December 31, 2016, the Company made a deposit of $565,000 to VBI with the intention to acquire VBI, who owns a 15.68% noncontrolling equity interest in REIT Changjiang for $3.6 million. The transaction was completed as of December 31, 2017. The Company’s principal shareholders also provide personal guarantees for the Company’s short-term bank loans (see Note 9). On March 17, 2017, Reit Changjiang entered into a guarantee agreement to guarantee the payment obligations of the Company’s related party, Changjiang Zhongrong Hengde Ecology Co., Ltd., to Changjiang Li Autonomous County Rural Credit Cooperatives. The guaranteed principal creditor’s right is RMB 25,000,000 (US$ 3,842,500). |
Equity
Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
EQUITY | NOTE 15 EQUITY Statutory reserve The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary 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 are 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. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The restricted amounts as determined pursuant to PRC statutory laws totaled $1,989,475 as of December 31, 2017. Shares issuance for reorganization On August 7, 2015, ReTo issued 10,000 common shares at $0.001 per share to its incorporator with cash proceeds of $10. Further, on August 2, 2016, ReTo issued a total of 17,830,000 common shares at $0.25 per share to all of the Company’s original shareholders or former shareholders of Beijing REIT. The parties involved included the Company’s original shareholders, their family members and individual or companies who hold shares for them. Since the shares were issued to the original shareholders of Beijing REIT, the transaction is considered as a part of the reorganization. The Company believes it is appropriate to reflect these share issuances as nominal stock issuance on a retroactive basis similar to stock split pursuant to ASC 260. The Company has retroactively adjusted all shares and per share data for all the periods presented. Among total proceeds of $4,457,500 from the share issuance, the Company paid $3,466,260 (approximately RMB 24 million) to the original shareholders of Beijing REIT to buy back their equity interests in Beijing REIT as part of reorganization. The extra $0.9 million was contributed by the original shareholders to the holding company to pay for the various professional expenses of its planned initial public offering and was treated as capital contribution by the original shareholders. Shares issuances In September 2016, the Company issued 800,000 shares of the Company’s common stock to settle a loan payable to an unrelated third party in the amount of RMB21,240,000 (approximately $3.2 million). The shares were valued at $4 per share because it was considered the fair value of the Company’s share that the investor was willing to convert the loan to. In December 2016, the Company issued 900,000 common shares to an unrelated investor, at a price of $4 per share for a total of $3,600,000. As of December 31, 2016, the Company had not received the funds from the investor and the shares were held in escrow. The Company did not record the value of the stock issued as of December 31, 2016 because the transaction was considered incomplete. These shares are excluded from the number of the outstanding shares as well as from the calculation of the weighted average shares outstanding. The Company received the funds from the investor on September 17, 2017 and the shares were released from escrow. On November 29, 2017, the Company completed its initial public offering (“IPO”) of 3,220,000 shares of its common stock at a public offering price of $5.00 per share. The gross proceeds from the offering were approximately $16.1 million before deducting placement agents’ commissions and other offering expenses, resulting in net proceeds of approximately $14.3 million. In connection with the offering, the Company’s common stock began trading on the NASDAQ Capital Market beginning on November 29, 2017 under the symbol “RETO”. Noncontrolling interest A reconciliation of noncontrolling interest as of December 31, 2017 and December 31, 2016 is as follows: December 31, December 31, 2017 2016 Beginning balance $ 5,012,260 $ 2,820,037 Proportionate share of net income 668,396 399,558 Capital contribution by a minority shareholder (a) - 2,218,617 Acquisition of noncontrolling interests in REIT Changjiang (b) (3,970,350 ) - Foreign currency translation adjustment 597,421 (425,952 ) Noncontrolling interest, ending balance $ 2,307,727 $ 5,012,260 (a) In July 2015, Beijing REIT established a new subsidiary REIT Xinyi wherein Beijing REIT owns 70% equity interest. Another noncontrolling shareholder contributed RMB 300,000 (equivalent to $48,240) in cash as of December 31, 2015 as well as a land use right of 206,667 square meters to exchange for 30% ownership interest in REIT Xinyi. The contribution of land use right as registered capital was pending approval by the local government as of December 31, 2015. Thus, no fair value of the land use right was recorded as assets or minority interest. In 2016, the contribution of land use right as the registered capital was not approved. On October 28, 2016, Beijing REIT and Xinyi Transportation signed an amendment to change Xinyi Transportation’s capital contribution from land use right to cash. Pursuant to the amendment signed on October 28, 2016 to the Collaboration Agreement signed on November 17, 2014 between Beijing REIT and its noncontrolling shareholder, all capital contribution should be in the form of cash. In November 2016, the noncontrolling shareholder made total cash contributions of RMB 15,000,000 (approximately $2,218,617) into REIT Xinyi instead of the land right contribution. (b) On January 10, 2016, Zhongrong Huanneng Investment (Beijing) Co., Ltd. (“Zhongrong”) signed an equity transfer agreement with Beijing REIT, pursuant to which the shareholders of Zhongrong agreed to transfer all of its equity interests held on behalf of four individual shareholders in REIT Changjiang to Beijing REIT. At the time of the transfer, REIT Changjiang was controlled in majority (84.32%) by the same four individual shareholders as those of Beijing REIT. Zhongrong and Beijing REIT are considered under common control since they are owned by the same four individual shareholders. During the year ended December 31, 2016, REIT Holdings made a deposit of $565,000 to VBI with the intention to acquire VBI’s 15.68% non-controlling equity interest in REIT Changjiang for $3.3 million. The transaction was completed as of December 31, 2017. As a result, REIT Changjiang is now a wholly owned subsidiary of the Company. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 16 – SEGMENT REPORTING ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different products or services. Based on management’s assessment, the Company has determined that it has four operating segments as defined by ASC 280, including machinery and equipment, construction material, municipal construction projects, and technology consulting and other services. Construction material segment manufactures and sells eco-friendly construction material. Machinery and equipment segment manufactures and sells machinery and equipment used to manufacture construction material. Construction service segment generates revenue from contracting municipal construction projects. Technological consulting service segment generates revenue from providing environmental-protection related consulting services to customers. The following table presents summary information by segment for the years ended December 31, 2017, 2016 and 2015, respectively: For the year ended December 31, 2017 Machinery Construction Municipal Technological consulting Total Revenues $ 14,484,853 $ 19,455,800 $ 250,422 $ 1,359,941 $ 35,551,016 Cost of goods sold 6,696,230 10,300,099 160,324 432,085 17,588,738 Gross profit 7,788,623 9,155,701 90,098 927,856 17,962,278 Interest expense and charges 410,214 601,141 370 1,235 1,012,960 Depreciation and amortization 207,651 1,359,088 - - 1,566,739 Capital expenditures 107,577 4,500,485 30,941 - 4,639,003 Income tax expenses 1,030,904 1,486,371 - 242,805 2,760,080 Segment profit (loss) 3,335,076 4,395,629 (82,323 ) (1,001,597 ) 6,646,785 Segment assets as of December 31, 2017 $ 10,899,522 $ 60,000,714 $ 567,030 $ 9,664,563 $ 81,131,829 For the year ended December 31, 2016 Machinery Construction Municipal Technological consulting Total Revenues $ 13,166,604 $ 18,424,613 $ - $ 833,052 $ 32,424,269 Cost of goods sold 5,423,418 12,333,845 - 514,754 18,272,017 Gross profit 7,743,186 6,090,768 - 318,298 14,152,252 Interest expense and charges 650,727 795,833 282 3,547 1,450,389 Depreciation and amortization 189,404 1,170,605 1,251 - 1,361,260 Capital expenditures 87,267 9,284,800 - - 9,372,067 Income tax expenses 945,186 967,221 - 39,949 1,952,356 Segment profit (loss) 3,125,268 2,830,950 (901,145 ) (551,993 ) 4,503,080 Segment assets as of December 31, 2016 $ 12,870,817 $ 47,829,971 $ (186,139 ) $ 2,146,350 $ 62,660,999 For the year ended December 31, 2015 Machinery and Equipment sales Construction materials sales Municipal construction projects Technological consulting and other services Total Revenues from external customers $ 6,548,866 $ 7,941,873 $ 1,249,699 $ 1,643,935 $ 17,384,373 Cost of goods sold 3,349,172 4,839,944 725,934 350,263 9,265,313 Gross profit 3,199,694 3,101,928 523,765 1,293,673 8,119,060 Interest expense and charges 434,307 598,022 - - 1,032,329 Depreciation and amortization 42,728 1,182,249 464 31,779 1,257,220 Capital expenditures 85,633 2,608,079 - 15,631 2,709,343 Income tax expenses 41,841 133,647 120,272 - 295,760 Segment profit 320,253 733,160 356,109 946,093 2,355,615 Segment assets as of December 31, 2015 $ 9,705,534 $ 38,332,912 $ 777,363 $ 1,431,958 $ 50,247,767 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS On January 16, 2018, Beijing REIT entered into a short-term bank loan agreement with BJB for a loan of RMB 5 million (approximately $0.77 million) as working capital for one year. The loan bears a fixed interest rate based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing, plus 20 basis points. The loan is guaranteed by a third-party guaranty company. On February 6, 2018, Beijing REIT entered into a short-term bank loan agreement with BJB for a loan of RMB 10 million (approximately $1.54 million) as working capital for eleven months. The loan bears a fixed interest rate based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing plus 92 basis points. The loan is guaranteed by a third-party guaranty company. On January 5, 2018, Beijing REIT amended its Articles of Incorporation to increase its registered capital from RMB 24 million to RMB 66 million. The Company injected $5 million (approximately RMB 31.5 million) as registered capital subsequent to the year end. As a result, the total paid-in capital of Beijing REIT is approximately RMB 55.5 million as of the reporting date. In April 2018, Beijing REIT made several payments amounting to approximately $3.2 million (or RMB 20,000,000) to Bank of Beijing, for the short-term loans borrowed in 2017. These consolidated financial statements were approved by management and available for issuance on April 25, 2018. The Company evaluated subsequent events through the date these consolidated financial statements were issued. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements of the Company reflect the principal activities of the entities listed below. All inter-company balances and transactions have been eliminated upon consolidation. Name of the entity Place of Ownership ReTo Eco-Solutions, Inc. (“RETO”) British Virgin Islands Parent REIT Holdings (China) Limited (“REIT Holdings”) Hong Kong, China 100 % Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”) Beijing, China WFOE,100 % Gu’an REIT Machinery Manufacturing Co., Ltd. (“Gu’an REIT”) Gu’an, China 100 % REIT Mingsheng Environment Protection Construction Materials (Changjiang) Co., Ltd. (“REIT Changjiang”) Changjiang, China 100 % Beijing REIT Eco-Engineering Technology Co., Ltd. (“REIT Technology”) Beijing, China 100 % Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd. (“Ruirong”) Langfang, China 100 % Hainan REIT Construction Project Co., Ltd. (“REIT Construction”) Haikou, China 100 % REIT Xinyi New Materials Co., Ltd. (“REIT Xinyi”) Xinyi, China 70 % Nanjing Dingxuan Environmental Protection Technology Development Co., Ltd. (“Dingxuan”) Nanjing, China 100 % REIT Technology Development (America), Inc. (“REIT US”) California, U.S.A 100 % REIT Q GREEN Machines Private Limited (“REIT India”) India 51 % Xinyi REIT Ecological Technology Co, Ltd (“REIT Ecological”) Xinyi, China 100 % Horgos Ta-REIT Environment Technology Co., Ltd., (“Horgos Ta-REIT”) Horgos, China 100 % |
Noncontrolling interests | Noncontrolling interests As of December 31, 2017, noncontrolling interests represent the noncontrolling shareholders’ proportionate share of equity interests in REIT Xinyi and REIT India. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition under the percentage of completion method, and realization of deferred tax assets. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs. |
Restricted Cash | Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure short-term bank notes payable and bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. Upon the maturity of the bank acceptance notes and bank borrowings, the Company is required to deposit the remainder to the escrow account to settle the bank notes payable and bank borrowings. The notes payable and bank borrowings are generally short term in nature due to their short maturity period of three months to one year; thus, restricted cash is classified as a current asset. As of December 31, 2017 and 2016, the Company had restricted cash of $0 and $230,400, respectively, related to the bank acceptance notes payable. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers with good credit standing with a maximum of 180 days and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on the assessment of customers’ credit and ongoing relationships, the Company’s payment terms typically range from 90 days to 1 year. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. |
Advances to Suppliers | Advances to Suppliers Advances to suppliers consist of balances paid to suppliers for services and materials that have not been provided or received. Advances to suppliers are short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance for uncollectible balances amounted to $534,245 and $542,151 as of December 31, 2017 and 2016, respectively. |
Property, Plant and Equipment | Property, Plant and Equipment Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Property 30–50 years Machinery equipment 5–15 years Transportation vehicles 5–10 years Office equipment and furniture 3–5 years Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. |
Construction-in-Progress ("CIP") | Construction-in-Progress (“CIP”) Construction-in-progress represents property and buildings under construction and consists of construction expenditures, equipment procurement, and other direct costs attributable to the construction. Construction-in-progress is not depreciated. Upon completion and ready for intended use, construction-in-progress is reclassified to the appropriate category within property, plant and equipment. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of land use rights and software. Under the PRC law, all land in the PRC is owned by the government and cannot be sold to an individual or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. These land use rights are sometimes referred to informally as “ownership”. Land use rights are stated at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Items Useful life Land use rights 45-49 years Software 10 years |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets recorded for the years ended December 31, 2017, 2016 and 2015 . |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets and liabilities. ● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advance to suppliers, accounts payable, accrued and other liabilities, advances from customers, deferred revenue, taxes payable and due to related parties to approximate the fair value of the respective assets and liabilities at December 31, 2017 and 2016, based upon the short-term nature of the assets and liabilities. The Company believes that the carrying amount of the short-term and long-term borrowings approximates fair value at December 31, 2017 and 2016 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates. |
Revenue Recognition | Revenue Recognition The Company currently generates its revenues from the following main sources: ● Revenue from machinery and equipment sales The Company provides installation service in connection with product sales. The Company evaluates them as a single arrangement and determines whether the arrangement contains more than one unit of accounting in accordance with the standard ASC 605, “Multiple-Deliverable Revenue Arrangement”. An arrangement is separated, if (1) the delivered element(s) has (have) value to the customer on a stand-alone basis and (2) if the arrangement includes a general right of return relative to the delivered element(s), delivery or performance of the undelivered element(s) is (are) considered probable and substantially in the control of the Company. If both criteria are fulfilled, the appropriate revenue recognition convention is then applied to each separate unit of accounting. Generally, the total arrangement consideration is allocated to the separate units of accounting based on their relative fair values. Reliable fair values are sales prices for the component when it is regularly sold on a stand-alone basis, third-party prices for similar components or, under certain circumstances, cost plus, an adequate business specific profit margin related to the relevant element. If the criteria are not met, revenue is deferred until such criteria are met or until the period in which the last undelivered element is delivered. The amount allocable to the delivered elements is limited to the amount that is not contingent upon delivery of additional elements or meeting other specified performance conditions. The Company considers the installation and product sales as single delivered element based on the fact that there are no other third parties who can provide installation service for the equipment the Company sells in the market and the delivered machinery and equipment have little to no value to the customers without the installation service. In addition, the Company does not provide any installation service to its customers without product sales. Thus there is no reliable fair value for the installation service on a stand-alone basis. Accordingly, the revenue is recognized when the product is delivered and installation is completed since the criteria for multiple-deliverable revenue arrangements in ASC 605 are not met. The Company allows certain customers to retain approximately 5-20% of the agreed purchase or installation price as security retention for one year after the Company delivers products and provides services. The Company considers this one-year term as a warranty period for the Company’s products sold and services rendered. Revenue was recognized when the product is delivered and installation is completed and security retention was recorded in account receivable on our balance sheets. Historically, the Company has not experienced significant customer complaints on products sold or services provided. No customers have claimed damages for any loss incurred due to quality problems. Therefore, no separate warranty provisions were provided as of December 31, 2017 and 2016 based on historical experience. As of December 31, 2017 and 2016, there were $557,919 and $787,518 related to the security retention included in the account receivable balance, respectively. ● Revenue from construction materials sales Revenue from sales of construction materials is recognized, net of estimated provisions for sales allowances, when the products are shipped and title is transferred. Revenue is recognized when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists (sales agreements and customer purchase orders are used to determine the existence of an arrangement); (ii) delivery of goods has occurred and risks and benefits of ownership have been transferred, which is when the goods are received by the customer at its designated location in accordance with the sales terms; (iii) the sales price is both fixed and determinable, and (iv) collectability is reasonably assured. Historically, sales returns have been minimal. ● Revenue from municipal construction projects Revenue for construction contract was recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to estimated total costs for the contract. Contract costs included all direct material, labor costs, equipment and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. General and administrative costs were charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Revenue recognized from construction projects was $250,422 and $0 for the years ended December 31, 2017 and 2016, respectively. For the year ended December 31, 2015, the Company recognized revenue of $1,249,699 from the contract when the project was completed. Revenue from claims and unapproved change orders is recorded only to the extent that contract costs relating to the claim have been incurred and the amounts have been received or awarded. For the years ended December 31, 2017, 2016 and 2015, no revenue has been recognized from claims or unapproved change orders. ● Revenue from technological consulting and other services Revenues from technological consulting and other services are recognized when services are rendered and contract amounts are earned. |
Shipping and Handling | Shipping and Handling Proceeds collected from customers for shipping and handling costs are included in revenues. Shipping and handling costs are expensed as incurred and are included in operating expenses, as a part of selling, and general and administrative expenses, in the Company’s consolidated statements of income and comprehensive income. Total shipping and handling expenses were $776,438, $630,218 and $586,707 for the years ended December 31, 2017, 2016 and 2015, respectively. |
Income Taxes | Income Taxes The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. To the extent applicable, the Company records interest and penalties as a general and administrative expense. The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the years ended December 31, 2017, 2016 and 2015. As of December 31, 2017, the tax years ended December 31, 2013 through December 31, 2017 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. |
Value added tax ("VAT") | Value added tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying consolidated financial statements. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. |
Accounting for changes in ownership | Accounting for changes in ownership As of December 31, 2017, the Company completed the acquisition of a 15.68% noncontrolling interest in its subsidiary REIT Changjiang. In accordance with ASC 810 “Consolidation”, changes in a parent’s ownership while the parent retains its controlling financial interest in its subsidiary should be accounted for as an equity transaction. Therefore, no gain or loss is recognized in consolidated net income (loss) or comprehensive income (loss). The carrying amount of the controlling and non-controlling interest is adjusted to reflect the change in its ownership interest in the subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is recognized in equity attributable to the parent. If a change in a parent’s ownership interest occurs in a subsidiary that has accumulated other comprehensive income, the carrying amount of accumulated other comprehensive income is adjusted to reflect the change in the ownership interest in the subsidiary through a corresponding charge or credit to equity attributable to the parent. |
Earnings per Share | Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended December 31, 2017, 2016 and 2015, the Company had no dilutive security outstanding that could potentially dilute EPS in the future. |
Foreign Currency Translation | Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in the results of operations. The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: December 31, 2017 December 31, 2016 December 31, 2015 Year-end spot rate US$1=RMB 6.5062 US$1= RMB 6.9448 US$1= RMB 6.4917 Average rate US$1=RMB 6.7568 US$1= RMB 6.6441 US$1= RMB 6.2288 |
Concentrations and Credit Risk | Concentrations and Credit Risk A majority of its expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to effectuate the remittance. The Company maintains certain bank accounts in the PRC, Hong Kong and BVI, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of December 31, 2017 and 2016, $2,018,199 and $1,581,404 of the Company’s cash and cash equivalents was on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. The cash balance held in the Hong Kong bank accounts was $51,634 and $8,730 as of December 31, 2017 and 2016, respectively. The cash balance held in BVI bank accounts was $8,774,608 and $199,079 as of December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, the Company held $3,356 and $146 of cash balances within the United States, respectively, which was below the FDIC insurance limits of $250,000. Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company’s sales are made to customers that are located primarily in China. The Company has a concentration of its revenues and receivables with specific customers. For the years ended December 31, 2017, 2016 and 2015, no customer accounted for more than 10% of the Company’s total revenue. As of December 31, 2017, and 2016, none of account receivable accounted for more than 10% of the total outstanding accounts receivable balance, As of December 31, 2015, one account receivable accounted for 12% of the total outstanding accounts receivable balance. For the years ended December 31, 2017, 2016 and 2015, the Company purchased approximately 31 %, 41% and 39% of its raw materials from one major supplier, respectively. Advanced payments to three major vendors accounted for 23%, 17% and 16% of the total advance payments outstanding as of December 31, 2017. Advanced payments to three major vendors accounted for 23%, 16% and 14% of the total advance payments outstanding as of December 31, 2016. |
Risks and Uncertainties | Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. |
Reclassifications | Reclassifications In connection with the retroactively restatement for effect of stock recapitalization, certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, In September 2017, the FASB has issued ASU No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Entities may still adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASC 606 as of January 1, 2018, under the modified retrospective method where the cumulative effect is recognized at the date of initial application. The Company has evaluated the impact of ASC 606 and has determined that fixed-price contracts, which comprise substantially all of the Company’s revenue, will most often represent a single performance obligation. The Company determined the impact of the adoption on both revenue recognition for sales of product and installation contracts to be immaterial on its consolidated financial statements and disclosures. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”) to provide guidance for recognizing gains and losses from the transfer of nonfinancial assets and in-substance nonfinancial assets in contracts with non-customers, unless other specific guidance applies. The standard requires a company to derecognize nonfinancial assets once it transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial asset. Additionally, when a company transfers its controlling interest in a nonfinancial asset, but retains a noncontrolling ownership interest, the company is required to measure any noncontrolling interest it receives or retains at fair value. The guidance requires companies to recognize a full gain or loss on the transaction. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20 will be eliminated. ASU 2017-05 is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The effective date of this guidance coincides with revenue recognition guidance. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements. In November 2017, the FASB issued ASU 2017-14, Income Statement-Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606). This Accounting Standards Update supersedes various SEC paragraphs and amends an SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 116 and SEC Release No.33-10403. Management plans to adopt this ASU during the year ending December 2019. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, “Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income.” The ASU amends ASC 220, Income Statement — Reporting Comprehensive Income In March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017 and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international tax consequences for many companies that operate internationally. The Company does not believe this guidance will have a material impact on its consolidated financial statements. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of all inter-company balances and transactions | Name of the entity Place of Ownership ReTo Eco-Solutions, Inc. (“RETO”) British Virgin Islands Parent REIT Holdings (China) Limited (“REIT Holdings”) Hong Kong, China 100 % Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”) Beijing, China WFOE,100 % Gu’an REIT Machinery Manufacturing Co., Ltd. (“Gu’an REIT”) Gu’an, China 100 % REIT Mingsheng Environment Protection Construction Materials (Changjiang) Co., Ltd. (“REIT Changjiang”) Changjiang, China 100 % Beijing REIT Eco-Engineering Technology Co., Ltd. (“REIT Technology”) Beijing, China 100 % Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd. (“Ruirong”) Langfang, China 100 % Hainan REIT Construction Project Co., Ltd. (“REIT Construction”) Haikou, China 100 % REIT Xinyi New Materials Co., Ltd. (“REIT Xinyi”) Xinyi, China 70 % Nanjing Dingxuan Environmental Protection Technology Development Co., Ltd. (“Dingxuan”) Nanjing, China 100 % REIT Technology Development (America), Inc. (“REIT US”) California, U.S.A 100 % REIT Q GREEN Machines Private Limited (“REIT India”) India 51 % Xinyi REIT Ecological Technology Co, Ltd (“REIT Ecological”) Xinyi, China 100 % Horgos Ta-REIT Environment Technology Co., Ltd., (“Horgos Ta-REIT”) Horgos, China 100 % |
Schedule of estimated useful lives of the assets | Useful life Property 30–50 years Machinery equipment 5–15 years Transportation vehicles 5–10 years Office equipment and furniture 3–5 years |
Schedule of Intangible assets are amortized using the straight-line method with the following estimated useful lives | Items Useful life Land use rights 45-49 years Software 10 years |
Schedule of currency exchange rates that were used in creating the consolidated financial statements | December 31, 2017 December 31, 2016 December 31, 2015 Year-end spot rate US$1=RMB 6.5062 US$1= RMB 6.9448 US$1= RMB 6.4917 Average rate US$1=RMB 6.7568 US$1= RMB 6.6441 US$1= RMB 6.2288 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Receivable, Net [Abstract] | |
Schedule of accounts receivable, net | December 31, December 31, Trade accounts receivable $ 20,319,213 $ 15,948,216 Less: allowances for doubtful accounts (1,815,927 ) (741,187 ) Accounts receivable, net $ 18,503,286 $ 15,207,029 |
Advances to Suppliers, Net (Tab
Advances to Suppliers, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Advances to Suppliers, Net [Abstract] | |
Schedule of advances to suppliers | December 31, December 31, Raw material prepayments for equipment production $ 916,210 $ 728,429 Construction material prepayments 1,037,338 1,263,942 Prepayment to construction subcontractors 428,334 432,188 Subtotal 2,381,882 2,424,559 Less: allowances for doubtful accounts (534,245 ) (542,151 ) Advances to suppliers, net $ 1,847,637 $ 1,882,408 |
Inventory, Net (Tables)
Inventory, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory, Net [Abstract] | |
Schedule of inventories | December 31, December 31, Raw materials $ 1,069,130 $ 910,950 Finished goods 542,706 397,576 Total inventory $ 1,611,836 $ 1,308,526 |
Prepaid Expenses and Other Cu29
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | December 31, December 31, Other receivable (1) $ 607,822 $ 294,233 Prepaid rent expense (2) 75,943 174,830 Value added tax receivable 86,289 59,385 Auction bidding deposit and others 4,611 2,879 Total 774,665 531,327 Less current portion (774,665 ) (356,498 ) Total noncurrent portion $ - $ 174,829 (1) Other receivables mainly represent mainly advances to employees for business development purposes and prepaid employee insurance and welfare benefit which will be subsequently deducted from the employee payroll. (2) The Company’s subsidiary Beijing REIT leases headquarter offices of 658 square meters from March 1, 2011 to August 30, 2018, and prepaid rent expense to the landlord, which is amortized over the lease term. |
Property, Plant and Equipment30
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property, plant and equipment, net | December 31, 2017 December 31, 2016 Property and buildings $ 28,336,864 $ 26,548,526 Machinery and equipment 4,041,418 3,020,150 Automobiles 925,945 667,639 Office and electric equipment 833,105 745,392 Subtotal 34,137,332 30,981,707 Construction in progress (“CIP”) 11,281,422 7,045,919 Less: accumulated depreciation (5,585,474 ) (3,867,296 ) Property and equipment, net $ 39,833,280 $ 34,160,330 |
Schedule of construction in progress | December 31, December 31, Land improvement costs on REIT Xinyi’s new manufacturing plant (a) $ 11,281,422 $ 7,045,919 Total CIP $ 11,281,422 $ 7,045,919 (a) In 2015, the Company formed a new subsidiary REIT Xinyi together with a 30% noncontrolling interest shareholder Xinyi Transportation Investment Co., Ltd. (“Xinyi Transportation”) and plans to construct a new manufacturing plant on a 206,667 square meters land, to produce concrete cutting machines and eco-friendly construction materials for road pavement and building construction use. Total budgeted investment for the whole project is RMB 800 million (approximately $118 million). The Company started the land improvement in late 2015 and plant construction in 2016. Total plant construction was budgeted at approximately $13 million. As of December 31, 2017, the Company already invested approximately $11.3 million on the plant construction and will invest additional approximately $1.7 million to fully complete the plant construction by May 2018(See Note 13). |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net [Abstract] | |
Schedule of intagible assets, net | December 31, December 31, Land use rights $ 8,145,824 $ 7,630,879 Software 33,541 31,470 Total 8,179,365 7,662,349 Less: accumulated amortization (777,815 ) (569,979 ) Intangible assets, net $ 7,401,550 $ 7,092,370 |
Summary of estimated future amortization expense | Twelve month ending December 31, Amortization expense 2018 $ 169,386 2019 169,368 2020 169,350 2021 169,135 2022 168,919 Thereafter 6,555,392 $ 7,401,550 |
Short-Term Bank Loans (Tables)
Short-Term Bank Loans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short-Term Bank Loans/Bank Note Payable [Abstract] | |
Schedule of short-term loans | December 31, December 31, China Merchants Bank (“CMB”) (1) $ 3,074,000 $ 2,880,000 Beijing Bank (“BJB”) (2) 4,611,000 2,854,666 Haikou United Bank (“HUB”) (3) 122,960 - Deferred financing costs (267,579 ) - Total $ 7,540,381 $ 5,734,666 (1) On June 16, 2016, the Company’s subsidiary, Beijing REIT, entered into a line of credit agreement with CMB Beijing Huizhong Beili Branch to borrow an aggregate of RMB 20 million (approximately $2.88 million as of December 31, 2016) as working capital for one year with a due date on June 16, 2017. These loans borrowed under this line of credit agreement were fully repaid upon maturity. The Company subsequently renewed this line of credit with CMB to borrow the same amount of RMB 20 million as working capital for another year. The difference in the US dollar amounts is due to the change of exchange rates. The loans borrowed under this line of credit agreement bear variable interest rates based on the prevailing interest rates set by the People’s Bank of China at the time of borrowing, plus 10 basis points. The effective rate is 5.655% per annum. These loans are guaranteed by the third-party guaranty company as well as by the Chairman and Chief Executive Officer of the Company. (2) In May, August, and December 2016, Beijing REIT entered into a series of loan agreements with BJB to borrow an aggregated of RMB 20.51 million ($2,854,666) as working capital for a period of six months to one year with annual interest rate of 4.785%. These loans have been repaid upon maturity. The loan was guaranteed by the third-party guaranty company as well as the principal shareholders of the Company. In January, April, July and October 2017, Beijing REIT entered into new loan agreements with BJB to borrow an aggregated of RMB 30 million ($4,611,000) as working capital for a period of six months to one year with respective maturity dates. Three of these loans bear fixed interest rates ranging from 4.785% to 5.655% per annum and one bears a variable interest rate based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing, plus 20 basis points with the effective rate of 5.22% per annum. All these loans are either guaranteed by a third-party guaranty company and/or the principal shareholders of the Company. Of these RMB 30 million loans borrowed in 2017, RMB 10 million ($1,537,000) have been repaid as of the date of this report. The remaining will be repaid upon their respective maturity date in 2018. (3) On January 24, 2017, the Company’s subsidiary, REIT Changjiang entered into a short-term bank loan agreement with Haikou United Bank to borrow RMB 1 million (approximately $153,700) as working capital for one year. The loan bears a fixed interest rate of 9% per annum. REIT Changjiang pledged its property with a carrying value of RMB 1.5 million as collateral. The loan is also guaranteed by the principal shareholders of the Company. During the year ended December 31, 2017, the Company repaid RMB 200,000 (approximately $30,740). The remaining loan has been fully repaid upon maturity in 2018. |
Bank Note Payable (Tables)
Bank Note Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short-Term Bank Loans/Bank Note Payable [Abstract] | |
Schedule of bank notes payable | December 31, December 31, 2017 2016 Beijing Bank (“BJB”) $ - $ 720,000 Total $ - $ 720,000 |
Long Term Bank Loans (Tables)
Long Term Bank Loans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Long Term Bank Loans [Abstract] | |
Schedule of long term bank loan | December 31, December 31, Long-term bank loan - Industrial and Commercial Bank of China (“ICBC”) (1) $ 7,411,564 $ 9,920,860 Long-term bank loan – Changjiang Agriculture Credit Union (“CACU”) (2) - 720,000 Subtotal 7,411,564 10,640,860 Less: current maturities of long-term loan (4,460,524 ) (4,391,260 ) Long-term loan-noncurrent portion $ 2,951,040 $ 6,249,600 (1) In September 2013, the Company’s subsidiary, REIT Changjiang, entered into a line of credit agreement with ICBC, which allowed REIT Changjiang to borrow up to RMB 96 million (approximately $13.8 million) from ICBC for six years. The loan is used in the construction of REIT Changjiang’s manufacturing plant. The loan bears a variable interest rate based on the prevailing interest rate for a 6-year loan set by the People’s Bank of China at the time of borrowing, plus 29 basis points, adjusted every six months. The Company pledged its land use right of 306,000 square meters and the construction in progress on this land with an aggregated carrying value of $28,463,526 at December 31,2017 as collateral for this loan. The Company is required to make monthly principal and interest payments. During the year ended December 31, 2017, the Company repaid RMB 20,673,882 with a remaining balance of RMB 48,220,976 (equivalent to $7,411,564) as of December 31, 2017. (2) On December 15, 2016, REIT Changjiang entered into a loan agreement with CACU to borrow $720,000 as working capital for two years with a fixed interest rate of 8% per annum. The Company pledged its equipment as the collateral. The loan was guaranteed by the CEO and principal shareholders of the Company. The Company was required to make monthly interest payments with principal due at maturity. The Company fully repaid the loan in 2017. |
Schedule of repayment schedule of the company's remaining long-term bank loan | Repayment in RMB Repayment in USD March 2018 19,420,976 2,985,004 September 2018 9,600,000 1,475,520 March 2019 9,600,000 1,475,520 September 2019 9,600,000 1,475,520 Total 48,220,976 7,411,564 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Taxes [Abstract] | |
Schedule of reconciles the statutory rate to the Company's effective tax rate | For the Years ended December 31, 2017 2016 2015 China Statutory income tax rate 25.0 25.0 25.0 Effect of favorable income tax rate in certain entity in PRC (2.8 ) (3.0 ) (13.9 ) Non-PRC entities not subject to PRC tax (3) 4.5 3.0 1.1 Research &Development (“R&D”) tax credit (1) (0.3 ) (0.5 ) (1.5 ) Non-deductible expenses-permanent difference (2) 0 1.1 0.3 Change in valuation allowance 2.9 4.6 0.2 Effective tax rate 29.3 % 30.2 % 11.2 % (1) According to PRC tax regulations, 150% of current year R&D expense approved by the local tax authority may be deducted from tax income. (2) Represents expenses incurred by the Company that were not deductible for PRC income tax. (3) Represents the tax losses incurred from operations outside of China. |
Schedule of income before income tax expense | For the Years ended December 31, 2017 2016 2015 Income before income tax expense from China 11,136,874 7,252,723 2,764,578 Loss before income tax expense from outside of China (1,730,009 ) (797,287 ) (113,203 ) Total 9,406,865 6,455,436 2,651,375 |
Schedule of income tax provision (benefit) | For the Years ended December 31, 2017 2016 2015 Current 2,954,130 1,997,042 341,208 Deferred (194,050 ) (44,686 ) (45,448 ) Total 2,760,080 1,952,356 295,760 |
Schedule of deferred tax asset | Deferred tax asset December 31 December 31, Provision of doubtful accounts $ 296,535 $ 89,015 Tax loss carried forwards 1,729,036 1,445,876 Valuation allowance on tax losses (1,729,036 ) (1,445,876 ) $ 296,535 $ 89,015 |
Schedule of taxes payable | December 31, December 31, 2017 2016 VAT tax payable $ 191,284 $ 461,107 Corporate income tax payable 2,927,254 1,596,874 Land use tax and other taxes payable 233,974 252,921 Total $ 3,352,512 $ 2,310,902 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | Twelve month ending December 31, 2018 $ 68,044 2019 10,360 2020 10,360 2021 10,360 2022 5,180 Total $ 104,304 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of due to related parties | December 31, December 31, Mr. Hengfang Li - (1) $ 375,697 $ 1,199,620 Total $ 375,697 $ 1,199,620 (1) Mr. Hengfang Li is the Chief Executive Officer (“CEO”) and major shareholder of the Company. Mr. Li periodically provides working capital loans to support the Company’s operations when needed. |
Schedule of acquisition deposit made to related parties | December 31, December 31, Shareholder of noncontrolling interest –Venture Business International Limited (“VBI”) - (2) $ - $ 565,000 Total $ - $ 565,000 (2) As of December 31, 2016, the Company made a deposit of $565,000 to VBI with the intention to acquire VBI, who owns a 15.68% noncontrolling equity interest in REIT Changjiang for $3.6 million. The transaction was completed as of December 31, 2017. |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Schedule of reconciliation of noncontrolling interest | December 31, December 31, 2017 2016 Beginning balance $ 5,012,260 $ 2,820,037 Proportionate share of net income 668,396 399,558 Capital contribution by a minority shareholder (a) - 2,218,617 Acquisition of noncontrolling interests in REIT Changjiang (b) (3,970,350 ) - Foreign currency translation adjustment 597,421 (425,952 ) Noncontrolling interest, ending balance $ 2,307,727 $ 5,012,260 (a) In July 2015, Beijing REIT established a new subsidiary REIT Xinyi wherein Beijing REIT owns 70% equity interest. Another noncontrolling shareholder contributed RMB 300,000 (equivalent to $48,240) in cash as of December 31, 2015 as well as a land use right of 206,667 square meters to exchange for 30% ownership interest in REIT Xinyi. The contribution of land use right as registered capital was pending approval by the local government as of December 31, 2015. Thus, no fair value of the land use right was recorded as assets or minority interest. In 2016, the contribution of land use right as the registered capital was not approved. On October 28, 2016, Beijing REIT and Xinyi Transportation signed an amendment to change Xinyi Transportation’s capital contribution from land use right to cash. Pursuant to the amendment signed on October 28, 2016 to the Collaboration Agreement signed on November 17, 2014 between Beijing REIT and its noncontrolling shareholder, all capital contribution should be in the form of cash. In November 2016, the noncontrolling shareholder made total cash contributions of RMB 15,000,000 (approximately $2,218,617) into REIT Xinyi instead of the land right contribution. (b) On January 10, 2016, Zhongrong Huanneng Investment (Beijing) Co., Ltd. (“Zhongrong”) signed an equity transfer agreement with Beijing REIT, pursuant to which the shareholders of Zhongrong agreed to transfer all of its equity interests held on behalf of four individual shareholders in REIT Changjiang to Beijing REIT. At the time of the transfer, REIT Changjiang was controlled in majority (84.32%) by the same four individual shareholders as those of Beijing REIT. Zhongrong and Beijing REIT are considered under common control since they are owned by the same four individual shareholders. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Summary of information by segment | For the year ended December 31, 2017 Machinery Construction Municipal Technological consulting Total Revenues $ 14,484,853 $ 19,455,800 $ 250,422 $ 1,359,941 $ 35,551,016 Cost of goods sold 6,696,230 10,300,099 160,324 432,085 17,588,738 Gross profit 7,788,623 9,155,701 90,098 927,856 17,962,278 Interest expense and charges 410,214 601,141 370 1,235 1,012,960 Depreciation and amortization 207,651 1,359,088 - - 1,566,739 Capital expenditures 107,577 4,500,485 30,941 - 4,639,003 Income tax expenses 1,030,904 1,486,371 - 242,805 2,760,080 Segment profit (loss) 3,335,076 4,395,629 (82,323 ) (1,001,597 ) 6,646,785 Segment assets as of December 31, 2017 $ 10,899,522 $ 60,000,714 $ 567,030 $ 9,664,563 $ 81,131,829 For the year ended December 31, 2016 Machinery Construction Municipal Technological consulting Total Revenues $ 13,166,604 $ 18,424,613 $ - $ 833,052 $ 32,424,269 Cost of goods sold 5,423,418 12,333,845 - 514,754 18,272,017 Gross profit 7,743,186 6,090,768 - 318,298 14,152,252 Interest expense and charges 650,727 795,833 282 3,547 1,450,389 Depreciation and amortization 189,404 1,170,605 1,251 - 1,361,260 Capital expenditures 87,267 9,284,800 - - 9,372,067 Income tax expenses 945,186 967,221 - 39,949 1,952,356 Segment profit (loss) 3,125,268 2,830,950 (901,145 ) (551,993 ) 4,503,080 Segment assets as of December 31, 2016 $ 12,870,817 $ 47,829,971 $ (186,139 ) $ 2,146,350 $ 62,660,999 For the year ended December 31, 2015 Machinery and Equipment sales Construction materials sales Municipal construction projects Technological consulting and other services Total Revenues from external customers $ 6,548,866 $ 7,941,873 $ 1,249,699 $ 1,643,935 $ 17,384,373 Cost of goods sold 3,349,172 4,839,944 725,934 350,263 9,265,313 Gross profit 3,199,694 3,101,928 523,765 1,293,673 8,119,060 Interest expense and charges 434,307 598,022 - - 1,032,329 Depreciation and amortization 42,728 1,182,249 464 31,779 1,257,220 Capital expenditures 85,633 2,608,079 - 15,631 2,709,343 Income tax expenses 41,841 133,647 120,272 - 295,760 Segment profit 320,253 733,160 356,109 946,093 2,355,615 Segment assets as of December 31, 2015 $ 9,705,534 $ 38,332,912 $ 777,363 $ 1,431,958 $ 50,247,767 |
Organization and Description 40
Organization and Description of Business (Details) $ / shares in Units, ¥ in Millions | Feb. 07, 2016USD ($)$ / sharesshares | Feb. 07, 2016CNY (¥)shares | Nov. 29, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($) | Feb. 29, 2016 | Feb. 07, 2016CNY (¥) | Jul. 15, 2015 | Dec. 31, 2014USD ($) | Nov. 22, 2011USD ($) | Nov. 22, 2011CNY (¥) | May 12, 1999USD ($)ShareholdersSubsidiaries | May 12, 1999CNY (¥)ShareholdersSubsidiaries |
Organization and Description of Business (Textual) | ||||||||||||||
Additional paid-in capital | $ 42,278,252 | $ 23,741,828 | ||||||||||||
Number of share holders | Shareholders | 4 | 4 | ||||||||||||
Number of subsidiaries | Subsidiaries | 5 | 5 | ||||||||||||
Carrying value of equity | 10,863,040 | 1,594,594 | $ 532,627 | $ 2,031,544 | ||||||||||
Common shares of value issued | 14,270,194 | |||||||||||||
Gross proceeds from the offering | 16,100,000 | |||||||||||||
Proceeds from issuance of shares | $ 4,457,500 | |||||||||||||
Original shareholders value | $ 14,270,194 | |||||||||||||
Unrelated investor [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Company issued shares | shares | 900,000 | |||||||||||||
Common shares of value issued | $ 3,600,000 | |||||||||||||
Common share price | $ / shares | $ 4 | |||||||||||||
Original shareholders value | $ 3,600,000 | |||||||||||||
IPO [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Company issued shares | shares | 3,220,000 | |||||||||||||
Common share price | $ / shares | $ 5 | |||||||||||||
Gross proceeds from the offering | $ 16,100,000 | |||||||||||||
Net proceeds | $ 14,300,000 | |||||||||||||
Equity Transfer Agreement [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Company issued shares | shares | 17,830,000 | 17,830,000 | ||||||||||||
Common shares of value issued | $ 3,466,260 | ¥ 24 | ||||||||||||
Common share price | $ / shares | $ 0.25 | |||||||||||||
Proceeds from issuance of shares | $ 4,457,500 | |||||||||||||
Original shareholders value | 3,466,260 | ¥ 24 | ||||||||||||
Beijing REIT Technology Development Co Ltd. [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Registered capital | $ 3,500,000 | ¥ 24 | ||||||||||||
Additional paid-in capital | $ 15,400,000 | ¥ 100 | ||||||||||||
Majority shareholders of interest rate | 84.32% | |||||||||||||
REIT Holdings [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Owners equity interest rate | 100.00% | |||||||||||||
Majority shareholders of interest rate | 15.68% | |||||||||||||
Deposit made to Venture Business International | $ 565,000 | |||||||||||||
REIT Holdings [Member] | Equity Transfer Agreement [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Carrying value of equity | $ 3,466,260 | ¥ 24 | ||||||||||||
REIT Changjiang [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Owners equity interest rate | 84.32% | 84.32% | ||||||||||||
Registered capital | $ 16,000,000 | ¥ 100 | ||||||||||||
Majority shareholders of interest rate | 15.68% | |||||||||||||
Non-controlling equity interest value | $ 3,300,000 | |||||||||||||
REIT Xinyi [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Owners equity interest rate | 70.00% | |||||||||||||
Noncontrolling shareholder, Percentage | 30.00% | |||||||||||||
Reit India [Member] | ||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||
Owners equity interest rate | 51.00% |
Summary of Significant Accoun41
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2017 | |
ReTo Eco-Solutions, Inc. ("RETO") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | British Virgin Islands |
Ownership Percentage, description | Parent |
REIT Holdings (China) Limited ("REIT Holdings") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Hong Kong, China |
Ownership Percentage | 100.00% |
Beijing REIT Technology Development Co., Ltd. ("Beijing REIT") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Beijing, China |
Ownership Percentage | 100.00% |
Ownership Percentage, description | WFOE,100%. |
Gu'an REIT Machinery Manufacturing Co., Ltd. ("Gu'an REIT") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Gu'an, China |
Ownership Percentage | 100.00% |
REIT Mingsheng Environment Protection Construction Materials (Changjiang) Co., Ltd. ("REIT Changjiang") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Changjiang, China |
Ownership Percentage | 100.00% |
Beijing REIT Eco-Engineering Technology Co., Ltd. ("REIT Eco-Engineering") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Beijing, China |
Ownership Percentage | 100.00% |
Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd. ("Ruirong") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Langfang, China |
Ownership Percentage | 100.00% |
Hainan REIT Construction Project Co., Ltd. ("REIT Construction") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Haikou, China |
Ownership Percentage | 100.00% |
REIT Xinyi New Materials Co., Ltd. ("REIT Xinyi") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Xinyi, China |
Ownership Percentage | 100.00% |
Nanjing Dingxuan Environmental Protection Technology Development Co., Ltd. ("Dingxuan") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Nanjing, China |
Ownership Percentage | 100.00% |
REIT Technology Development (America), Inc. ("REIT US") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | California, U.S.A |
Ownership Percentage | 100.00% |
REIT Q GREEN Machines Private Limited ("REIT India") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | India |
Ownership Percentage | 51.00% |
Xinyi REIT Ecological Technology Co, Ltd ("REIT Ecological") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Xinyi, China |
Ownership Percentage | 100.00% |
Horgos Ta-REIT Environment Technology Co., Ltd., ("Horgos Ta-REIT") | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Horgos, China |
Ownership Percentage | 100.00% |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Property [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 30 years |
Property [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 50 years |
Machinery equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 5 years |
Machinery equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 15 years |
Transportation vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 5 years |
Transportation vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 10 years |
Office equipment and furniture [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 3 years |
Office equipment and furniture [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 5 years |
Summary of Significant Accoun43
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2017 | |
Land use rights [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets estimated useful lives | 49 years |
Land use rights [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets estimated useful lives | 45 years |
Software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets estimated useful lives | 10 years |
Summary of Significant Accoun44
Summary of Significant Accounting Policies (Details 3) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) |
Summary of Significant Accounting Policies [Abstract] | ||||||
Year-end spot rate | $ 1 | ¥ 6.5062 | $ 1 | ¥ 6.9448 | $ 1 | ¥ 6.4917 |
Average rate | $ 1 | ¥ 6.7568 | $ 1 | ¥ 6.6441 | $ 1 | ¥ 6.2288 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of Significant Accounting Policies (Textual) | ||||
Restricted cash | $ 230,400 | |||
Accounts receivable, description | Based on the assessment of customers' credit and ongoing relationships, the Company's payment terms typically range from 90 days to 1 year. | |||
Allowances for doubtful accounts | $ 534,245 | 542,151 | ||
Impairment assets | $ 0 | 0 | ||
Security retention, description | The Company allows certain customers to retain approximately 5-20% of the agreed purchase or installation price as security retention for one year after the Company delivers products and provides services. | |||
Security retention, amount | $ 557,919 | 787,518 | ||
Revenue construction | 250,422 | 0 | $ 1,249,699 | |
Revenues | 35,551,016 | 32,424,269 | 17,384,373 | |
Shipping and handling expenses | $ 776,438 | 630,218 | 586,707 | |
Value added tax percentage | 17.00% | |||
Cash and cash equivalents | $ 10,863,040 | 1,594,594 | $ 532,627 | $ 2,031,544 |
FDIC insurance limits | $ 250,000 | |||
Supplier, description | For the years ended December 31, 2017, 2016 and 2015, the Company purchased approximately 31 %, 41% and 39% of its raw materials from one major supplier, respectively. | |||
Vendors, description | Advanced payments to three major vendors accounted for 23%, 16% and 14% of the total advance payments outstanding as of December 31, 2016. | |||
Federal Deposit Insurance Corporation [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Cash and cash equivalents | $ 2,018,199 | $ 1,581,404 | ||
Revenue [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk, Percentage | 10.00% | 10.00% | 10.00% | |
Accounts receivable [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk, Percentage | 10.00% | 10.00% | 12.00% | |
Hong Kong [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Held in cash balance | $ 51,634 | $ 8,730 | ||
BVI [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Held in cash balance | 8,774,608 | 199,079 | ||
United States [Memebr] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Held in cash balance | $ 3,356 | $ 146 | ||
REIT Changjiang [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Non-controlling equity interest percentage | 15.68% |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Receivable, Net [Abstract] | ||
Trade accounts receivable | $ 20,319,213 | $ 15,948,216 |
Less: allowances for doubtful accounts | (1,815,927) | (741,187) |
Accounts receivable, net | $ 18,503,286 | $ 15,207,029 |
Advances to Suppliers, Net (Det
Advances to Suppliers, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Advances to Suppliers, Net [Abstract] | ||
Raw material prepayments for equipment production | $ 916,210 | $ 728,429 |
Construction material prepayments | 1,037,338 | 1,263,942 |
Prepayment to construction subcontractors | 428,334 | 432,188 |
Subtotal | 2,381,882 | 2,424,559 |
Less: allowances for doubtful accounts | (534,245) | (542,151) |
Advances to suppliers, net | $ 1,847,637 | $ 1,882,408 |
Advances to Suppliers, Net (D48
Advances to Suppliers, Net (Details Textual) | 12 Months Ended |
Dec. 31, 2017 | |
Advances to Suppliers, Net [Abstract] | |
Construction material, description | It usually takes 3 to 6 months for the suppliers to deliver raw material for our equipment production and takes up to 6 to 12 months for the suppliers to deliver the construction materials. |
Inventory, Net (Details)
Inventory, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory, Net [Abstract] | ||
Raw materials | $ 1,069,130 | $ 910,950 |
Finished goods | 542,706 | 397,576 |
Total inventory | $ 1,611,836 | $ 1,308,526 |
Inventory, Net (Details Textual
Inventory, Net (Details Textual) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory, Net (Textual) | ||
Inventory reserves |
Prepaid Expenses and Other Cu51
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Prepaid Expenses and Other Current Assets [Abstract] | |||
Other receivable | [1] | $ 607,822 | $ 294,233 |
Prepaid rent expense | [2] | 75,943 | 174,830 |
Value added tax receivable | 86,289 | 59,385 | |
Auction bidding deposit and others | 4,611 | 2,879 | |
Total | 774,665 | 531,327 | |
Less current portion | 774,665 | 356,498 | |
Total noncurrent portion | $ 174,829 | ||
[1] | Other receivables mainly represent mainly advances to employees for business development purposes and prepaid employee insurance and welfare benefit which will be subsequently deducted from the employee payroll. | ||
[2] | The Company's subsidiary Beijing REIT leases headquarter offices of 658 square meters from March 1, 2011 to August 30, 2018, and prepaid rent expense to the landlord, which is amortized over the lease term. |
Property, Plant and Equipment52
Property, Plant and Equipment, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 34,137,332 | $ 30,981,707 |
Construction in progress ("CIP") | 11,281,422 | 7,045,919 |
Less: accumulated depreciation | (5,585,474) | (3,867,296) |
Property and equipment, net | 39,833,280 | 34,160,330 |
Property and buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 28,336,864 | 26,548,526 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 4,041,418 | 3,020,150 |
Automobiles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 925,945 | 667,639 |
Office and electric equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 833,105 | $ 745,392 |
Property, Plant and Equipment53
Property, Plant and Equipment, Net (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment, Net [Abstract] | |||
Land improvement costs on REIT Xinyi's new manufacturing plant | [1] | $ 11,281,422 | $ 7,045,919 |
Total CIP | $ 11,281,422 | $ 7,045,919 | |
[1] | In 2015, the Company formed a new subsidiary REIT Xinyi together with a 30% noncontrolling interest shareholder Xinyi Transportation Investment Co., Ltd. ("Xinyi Transportation") and plans to construct a new manufacturing plant on a 206,667 square meters land, to produce concrete cutting machines and eco-friendly construction materials for road pavement and building construction use. Total budgeted investment for the whole project is RMB 800 million (approximately $118 million). The Company started the land improvement in late 2015 and plant construction in 2016. Total plant construction was budgeted at approximately $13 million. As of December 31, 2017, the Company already invested approximately $11.3 million on the plant construction and will invest additional approximately $1.7 million to fully complete the plant construction by May 2018(See Note 13). |
Property, Plant and Equipment54
Property, Plant and Equipment, Net (Details Textual) ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2017USD ($)m² | Dec. 31, 2016USD ($)m² | Dec. 31, 2015USD ($)m² | Dec. 31, 2015CNY (¥)m² | |
Property, Plant and Equipment, Net (Textual) | ||||
Depreciation expense | $ | $ 1,403,585 | $ 1,185,476 | $ 1,119,985 | |
Area of land | 306,000 | 306,000 | 206,667 | 206,667 |
REIT Xinyi [Member] | ||||
Property, Plant and Equipment, Net (Textual) | ||||
Owners equity interest rate | 30.00% | 30.00% | ||
Area of land | 206,667 | 206,667 | ||
Total budget cost | $ 118,000,000 | ¥ 800 | ||
Plant construction expenditure description | The Company started the land improvement in late 2015 and plant construction in 2016. Total plant construction was budgeted at approximately $13 million. As of December 31, 2017, the Company already invested approximately $11.3 million on the plant construction and will invest additional approximately $1.7 million to fully complete the plant construction by May 2018(See Note 13). |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 8,179,365 | $ 7,662,349 |
Less: accumulated amortization | (777,815) | (569,979) |
Intangible assets, net | 7,401,550 | 7,092,370 |
Land use rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | 8,145,824 | 7,630,879 |
Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 33,541 | $ 31,470 |
Intangible Assets, Net (Detai56
Intangible Assets, Net (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible Assets, Net [Abstract] | ||
2,018 | $ 169,386 | |
2,019 | 169,368 | |
2,020 | 169,350 | |
2,021 | 169,135 | |
2,022 | 168,919 | |
Thereafter | 6,555,392 | |
Estimated future amortization expense | $ 7,401,550 | $ 7,092,370 |
Intangible Assets, Net (Detai57
Intangible Assets, Net (Details Textual) | 12 Months Ended | ||
Dec. 31, 2017USD ($)m² | Dec. 31, 2016USD ($)m² | Dec. 31, 2015USD ($)m² | |
Intangible Assets, Net (Textual) | |||
Land use right | m² | 306,000 | 306,000 | 206,667 |
Land, amount carrying value | $ 5,300,000 | $ 7,100,000 | |
Amortization expense | $ 163,154 | $ 175,784 | $ 137,225 |
Short-Term Bank Loans (Details)
Short-Term Bank Loans (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Short-term Debt [Line Items] | |||
Total short-term loans | $ 7,540,381 | $ 5,734,666 | |
Deferred financing costs [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | (267,579) | ||
China Merchants Bank ("CMB") [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [1] | 3,074,000 | 2,880,000 |
Beijing Bank ("BJB") [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [2] | 4,611,000 | 2,854,666 |
Haikou United Bank ("HUB") [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [3] | $ 122,960 | |
[1] | On June 16, 2016, the Company's subsidiary, Beijing REIT, entered into a line of credit agreement with CMB Beijing Huizhong Beili Branch to borrow an aggregate of RMB 20 million (approximately $2.88 million as of December 31, 2016) as working capital for one year with a due date on June 16, 2017. These loans borrowed under this line of credit agreement were fully repaid upon maturity. The Company subsequently renewed this line of credit with CMB to borrow the same amount of RMB 20 million as working capital for another year. The difference in the US dollar amounts is due to the change of exchange rates. The loans borrowed under this line of credit agreement bear variable interest rates based on the prevailing interest rates set by the People's Bank of China at the time of borrowing, plus 10 basis points. The effective rate is 5.655% per annum. These loans are guaranteed by the third-party guaranty company as well as by the Chairman and Chief Executive Officer of the Company. | ||
[2] | In May, August, and December 2016, Beijing REIT entered into a series of loan agreements with BJB to borrow an aggregated of RMB 20.51 million ($2,854,666) as working capital for a period of six months to one year with annual interest rate of 4.785%. These loans have been repaid upon maturity. The loan was guaranteed by the third-party guaranty company as well as the principal shareholders of the Company. In January, April, July and October 2017, Beijing REIT entered into new loan agreements with BJB to borrow an aggregated of RMB 30 million ($4,611,000) as working capital for a period of six months to one year with respective maturity dates. Three of these loans bear fixed interest rates ranging from 4.785% to 5.655% per annum and one bears a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 20 basis points with the effective rate of 5.22% per annum. All these loans are either guaranteed by a third-party guaranty company and/or the principal shareholders of the Company. Of these RMB 30 million loans borrowed in 2017, RMB 10 million ($1,537,000) have been repaid as of the date of this report. The remaining will be repaid upon their respective maturity date in 2018. | ||
[3] | On January 24, 2017, the Company's subsidiary, REIT Changjiang entered into a short-term bank loan agreement with Haikou United Bank to borrow RMB 1 million (approximately $153,700) as working capital for one year. The loan bears a fixed interest rate of 9% per annum. REIT Changjiang pledged its property with a carrying value of RMB 1.5 million as collateral. The loan is also guaranteed by the principal shareholders of the Company. During the year ended December 31, 2017, the Company repaid RMB 200,000 (approximately $30,740). The remaining loan has been fully repaid upon maturity in 2018. |
Short-Term Bank Loans (Details
Short-Term Bank Loans (Details Textual) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017CNY (¥) | Oct. 31, 2017USD ($) | Oct. 31, 2017CNY (¥) | Jul. 31, 2017USD ($) | Jul. 31, 2017CNY (¥) | Apr. 30, 2017USD ($) | Apr. 30, 2017CNY (¥) | Jan. 31, 2017USD ($) | Jan. 31, 2017CNY (¥) | Jan. 24, 2017USD ($) | Jan. 24, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Aug. 31, 2016USD ($) | Aug. 31, 2016CNY (¥) | Jun. 16, 2016CNY (¥) | May 31, 2016USD ($) | May 31, 2016CNY (¥) | |
Short-Term Bank Loans (Textual) | |||||||||||||||||||||
Borrow an aggregate amount | $ 7,540,381 | $ 5,734,666 | |||||||||||||||||||
Interest expense on all short-term bank loans | $ 365,964 | 635,875 | $ 350,148 | ||||||||||||||||||
China Merchants Bank One [Member] | |||||||||||||||||||||
Short-Term Bank Loans (Textual) | |||||||||||||||||||||
Borrow an aggregate amount | 2,880,000 | ¥ 20,000,000 | |||||||||||||||||||
Short term loan, description | The loans borrowed under this line of credit agreement bear variable interest rates based on the prevailing interest rates set by the People's Bank of China at the time of borrowing, plus 10 basis points. | The loans borrowed under this line of credit agreement bear variable interest rates based on the prevailing interest rates set by the People's Bank of China at the time of borrowing, plus 10 basis points. | |||||||||||||||||||
Effective interest rate, percentage | 5.655% | 5.655% | |||||||||||||||||||
Beijing Bank One [Member] | Short Term Borrowings [Member] | |||||||||||||||||||||
Short-Term Bank Loans (Textual) | |||||||||||||||||||||
Borrow an aggregate amount | $ 1,537,000 | $ 2,854,666 | ¥ 10,000,000 | ¥ 20,510,000 | $ 2,854,666 | ¥ 20,510,000 | $ 2,854,666 | ¥ 20,510,000 | |||||||||||||
Short term loan, description | The loan bears a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 20 basis points. | The loan bears a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 20 basis points. | |||||||||||||||||||
Effective interest rate, percentage | 4.785% | 4.785% | 4.785% | 4.785% | 4.785% | 4.785% | |||||||||||||||
Beijing Bank Two [Member] | Short Term Borrowings [Member] | |||||||||||||||||||||
Short-Term Bank Loans (Textual) | |||||||||||||||||||||
Borrow an aggregate amount | 30,000 | $ 4,611,000 | ¥ 30,000,000 | $ 4,611,000 | ¥ 30,000,000 | $ 4,611,000 | ¥ 30,000,000 | $ 4,611,000 | ¥ 30,000,000 | ||||||||||||
Beijing Bank Two [Member] | Maximum [Member] | Short Term Borrowings [Member] | |||||||||||||||||||||
Short-Term Bank Loans (Textual) | |||||||||||||||||||||
Effective interest rate, percentage | 5.655% | 5.655% | 5.655% | 5.655% | 5.655% | 5.655% | 5.655% | 5.655% | |||||||||||||
Beijing Bank Two [Member] | Minimum [Member] | Short Term Borrowings [Member] | |||||||||||||||||||||
Short-Term Bank Loans (Textual) | |||||||||||||||||||||
Effective interest rate, percentage | 4.785% | 4.785% | 4.785% | 4.785% | 4.785% | 4.785% | 4.785% | 4.785% | |||||||||||||
Haikou United Bank One [Member] | Short Term Borrowings [Member] | |||||||||||||||||||||
Short-Term Bank Loans (Textual) | |||||||||||||||||||||
Borrow an aggregate amount | $ 153,700 | ¥ 1,000,000 | |||||||||||||||||||
Effective interest rate, percentage | 9.00% | 9.00% | |||||||||||||||||||
Repaid debt outstanding | $ 30,740 | ¥ 200,000 | |||||||||||||||||||
Property with carrying value of the collateral | ¥ | ¥ 1,500,000 |
Bank Note Payable (Details)
Bank Note Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of bank notes payable | ||
Total | $ 720,000 | |
Beijing Bank ("BJB") [Member] | ||
Schedule of bank notes payable | ||
Total | $ 720,000 |
Bank Note Payable (Details Text
Bank Note Payable (Details Textual) ¥ in Millions | 1 Months Ended | 12 Months Ended | |||
Dec. 20, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 20, 2016CNY (¥) | |
Bank Notes Payable (Textual) | |||||
Bank notes payable | $ 720,000 | ||||
Interest expense | $ 1,012,960 | 1,450,389 | $ 1,032,329 | ||
Beijing REIT [Member] | |||||
Bank Notes Payable (Textual) | |||||
Bank notes payable | $ 720,000 | ¥ 5 | |||
Interest rate of per annum | 5.60% | 5.60% | |||
Restricted cash | $ 144,000 | ¥ 1 | |||
Maturity date | Dec. 31, 2017 |
Long Term Bank Loans (Details)
Long Term Bank Loans (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Subtotal | $ 7,411,564 | $ 10,640,860 | |
Less: current maturities of long-term loan | (4,460,524) | (4,391,260) | |
Long-term loan-noncurrent portion | 2,951,040 | 6,249,600 | |
Industrial and Commercial Bank of China ("ICBC") [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Subtotal | [1] | 7,411,564 | 9,920,860 |
Changjiang Agriculture Credit Union ("CACU") [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Subtotal | [2] | $ 720,000 | |
[1] | In September 2013, the Company's subsidiary, REIT Changjiang, entered into a line of credit agreement with ICBC, which allowed REIT Changjiang to borrow up to RMB 96 million (approximately $13.8 million) from ICBC for six years. The loan is used in the construction of REIT Changjiang's manufacturing plant. The loan bears a variable interest rate based on the prevailing interest rate for a 6-year loan set by the People's Bank of China at the time of borrowing, plus 29 basis points, adjusted every six months. The Company pledged its land use right of 306,000 square meters and the construction in progress on this land with an aggregated carrying value of $28,463,526 at December 31,2017 as collateral for this loan. The Company is required to make monthly principal and interest payments. During the year ended December 31, 2017, the Company repaid RMB 20,673,882 with a remaining balance of RMB 48,220,976 (equivalent to $7,411,564) as of December 31, 2017. | ||
[2] | On December 15, 2016, REIT Changjiang entered into a loan agreement with CACU to borrow $720,000 as working capital for two years with a fixed interest rate of 8% per annum. The Company pledged its equipment as the collateral. The loan was guaranteed by the CEO and principal shareholders of the Company. The Company was required to make monthly interest payments with principal due at maturity. The Company fully repaid the loan in 2017. |
Long Term Bank Loans (Details 1
Long Term Bank Loans (Details 1) - Dec. 31, 2017 | USD ($) | CNY (¥) |
Long Term Bank Loans [Abstract] | ||
March 2,018 | $ 2,985,004 | ¥ 19,420,976 |
September 2,018 | 1,475,520 | 9,600,000 |
March 2,019 | 1,475,520 | 9,600,000 |
September 2,019 | 1,475,520 | 9,600,000 |
Long-term Debt | $ 7,411,564 | ¥ 48,220,976 |
Long Term Bank Loans (Details T
Long Term Bank Loans (Details Textual) | Dec. 15, 2016 | Sep. 30, 2013USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017CNY (¥) | Sep. 30, 2013CNY (¥) |
Long Term Bank Loans (Textual) | ||||||||
Interest expense, Borrowings | $ 585,158 | $ 795,025 | $ 1,151,267 | |||||
Interest expense, Capital securities | 469,086 | |||||||
Interest expense, Debt | 585,158 | $ 795,025 | $ 682,181 | |||||
Beijing REIT Technology Development Co Ltd. [Member] | ||||||||
Long Term Bank Loans (Textual) | ||||||||
Line of credit facility, Maximum borrowing | $ 13,800,000 | ¥ 96,000,000 | ||||||
Long term debt, description | On December 15, 2016, REIT Changjiang entered into a loan agreement with CACU to borrow $720,000 as working capital for two years with a fixed interest rate of 8% per annum. | The loan bears a variable interest rate based on the prevailing interest rate for a 6-year loan set by the People's Bank of China at the time of borrowing, plus 29 basis points, adjusted every six months. | ||||||
Construction in progress aggregated carrying value | 28,463,526 | |||||||
Repayments of debt | ¥ | ¥ 20,673,882 | |||||||
Outstanding loan balance | $ 7,411,564 | ¥ 48,220,976 |
Taxes (Details)
Taxes (Details) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Taxes [Abstract] | ||||
China Statutory income tax rate | 25.00% | 25.00% | 25.00% | |
Effect of favorable income tax rate in certain entity in PRC | (2.80%) | (3.00%) | (13.90%) | |
Non-PRC entities not subject to PRC tax | [1] | 4.50% | 3.00% | 1.10% |
Research &Development ("R&D") tax credit | [2] | (0.30%) | (0.50%) | (1.50%) |
Non-deductible expenses-permanent difference | [3] | 0.00% | 1.10% | 0.30% |
Change in valuation allowance | 2.90% | 4.60% | 0.20% | |
Effective tax rate | 29.30% | 30.20% | 11.20% | |
[1] | Represents the tax losses incurred from operations outside of China. | |||
[2] | According to PRC tax regulations, 150% of current year R&D expense approved by the local tax authority may be deducted from tax income. | |||
[3] | Represents expenses incurred by the Company that were not deductible for PRC income tax. |
Taxes (Details 1)
Taxes (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Taxes [Abstract] | |||
Income before income tax expense from China | $ 11,136,874 | $ 7,252,723 | $ 2,764,578 |
Loss before income tax expense from outside of China | (1,730,009) | (797,287) | (113,203) |
Income Before Income Taxes | $ 9,406,865 | $ 6,455,436 | $ 2,651,375 |
Taxes (Details 2)
Taxes (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Taxes [Abstract] | |||
Current | $ 2,954,130 | $ 1,997,042 | $ 341,208 |
Deferred | (194,045) | (44,685) | (45,448) |
Total | $ 2,760,080 | $ 1,952,356 | $ 295,760 |
Taxes (Details 3)
Taxes (Details 3) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Taxes [Abstract] | ||
Provision of doubtful accounts | $ 296,535 | $ 89,015 |
Tax loss carried forwards | 1,729,036 | 1,445,876 |
Valuation allowance on tax losses | (1,729,036) | (1,445,876) |
Deferred tax assets, net | $ 296,535 | $ 89,015 |
Taxes (Details 4)
Taxes (Details 4) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Taxes [Abstract] | ||
VAT tax payable | $ 191,284 | $ 461,107 |
Corporate income tax payable | 2,927,254 | 1,596,874 |
Land use tax and other taxes payable | 233,974 | 252,921 |
Total | $ 3,352,512 | $ 2,310,902 |
Taxes (Details Textual)
Taxes (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Taxes (Textual) | |||
Corporate income tax rate | 25.00% | 25.00% | 25.00% |
Estimated tax savings preferred tax rates | $ 266,125 | $ 196,303 | $ 369,478 |
Per share effect of the tax exemption | $ 0.01 | $ 0.01 | $ 0.02 |
Deferred tax assets | $ 296,535 | $ 89,015 | |
Increases in valuation allowance | $ 283,160 | $ 295,000 | |
VAT rate | 17.00% | ||
Percentage of taxable income | 10.00% | 10.00% | 10.00% |
R&D expense approved by local tax authority deducted from tax income | 100.00% | ||
Percentage of exemption income of construction materials from income tax | 10 | ||
Beijing REIT [Member] | |||
Taxes (Textual) | |||
Favorable income tax rate | 15.00% |
Commitments (Details)
Commitments (Details) | Dec. 31, 2017USD ($) |
Commitments [Abstract] | |
2,018 | $ 68,044 |
2,019 | 10,360 |
2,020 | 10,360 |
2,021 | 10,360 |
2,022 | 5,180 |
Total | $ 104,304 |
Commitments (Details Textual)
Commitments (Details Textual) | 12 Months Ended | ||
Dec. 31, 2017USD ($)m² | Dec. 31, 2016USD ($)m² | Dec. 31, 2015USD ($)m² | |
Commitments (Textual) | |||
Operating lease expense amount | $ 89,785 | $ 196,330 | $ 264,696 |
Area of land | m² | 306,000 | 306,000 | 206,667 |
Project expected term | May 31, 2018 | ||
Capital commitment for related construction | $ 1,700,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||
Due to related parties | $ 375,697 | $ 1,199,620 | |
Mr. Hengfang Li [Member] | |||
Related Party Transaction [Line Items] | |||
Due to related parties | [1] | $ 375,697 | $ 1,199,620 |
[1] | Mr. Hengfang Li is the Chief Executive Officer ("CEO") and major shareholder of the Company. Mr. Li periodically provides working capital loans to support the Company's operations when needed. |
Related Party Transactions (D74
Related Party Transactions (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||
Acquisition deposit | $ 565,000 | ||
Venture Business International Limited ("VBI") [Member] | |||
Related Party Transaction [Line Items] | |||
Acquisition deposit | [1] | $ 565,000 | |
[1] | As of December 31, 2016, the Company made a deposit of $565,000 to VBI with the intention to acquire VBI, who owns a 15.68% noncontrolling equity interest in REIT Changjiang for $3.6 million. The transaction was completed as of December 31, 2017. |
Related Party Transactions (D75
Related Party Transactions (Details Textual) | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Mar. 17, 2017USD ($) | Mar. 17, 2017CNY (¥) | |
Related Party Transactions (Textual) | |||
Interest rate of related party | $ 3,600,000 | ||
Guaranteed principal creditors amount | $ 3,842,500 | ¥ 25,000,000 | |
VBI [Member] | |||
Related Party Transactions (Textual) | |||
Acquisition deposit made to related parties | $ 565,000 | ||
Percentage of interest rate of related party | 15.68% |
Equity (Details)
Equity (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||||
Equity [Abstract] | ||||||
Beginning balance | $ 5,012,260 | $ 2,820,037 | ||||
Proportionate share of net income | 668,396 | 399,559 | $ 41,270 | |||
Capital contribution by a minority shareholder | [1] | 2,218,617 | [1] | 2,912,760 | ||
Acquisition of noncontrolling interests in REIT Changjiang | [2] | (3,970,350) | ||||
Foreign currency translation adjustment | 597,421 | (425,952) | ||||
Ending balance | $ 2,307,727 | $ 5,012,260 | $ 2,820,037 | |||
[1] | In July 2015, Beijing REIT established a new subsidiary REIT Xinyi wherein Beijing REIT owns 70% equity interest. Another noncontrolling shareholder contributed RMB 300,000 (equivalent to $48,240) in cash as of December 31, 2015 as well as a land use right of 206,667 square meters to exchange for 30% ownership interest in REIT Xinyi. The contribution of land use right as registered capital was pending approval by the local government as of December 31, 2015. Thus, no fair value of the land use right was recorded as assets or minority interest. In 2016, the contribution of land use right as the registered capital was not approved. On October 28, 2016, Beijing REIT and Xinyi Transportation signed an amendment to change Xinyi Transportation's capital contribution from land use right to cash. Pursuant to the amendment signed on October 28, 2016 to the Collaboration Agreement signed on November 17, 2014 between Beijing REIT and its noncontrolling shareholder, all capital contribution should be in the form of cash. In November 2016, the noncontrolling shareholder made total cash contributions of RMB 15,000,000 (approximately $2,218,617) into REIT Xinyi instead of the land right contribution. | |||||
[2] | On January 10, 2016, Zhongrong Huanneng Investment (Beijing) Co., Ltd. ("Zhongrong") signed an equity transfer agreement with Beijing REIT, pursuant to which the shareholders of Zhongrong agreed to transfer all of its equity interests held on behalf of four individual shareholders in REIT Changjiang to Beijing REIT. At the time of the transfer, REIT Changjiang was controlled in majority (84.32%) by the same four individual shareholders as those of Beijing REIT. Zhongrong and Beijing REIT are considered under common control since they are owned by the same four individual shareholders. As of December 31, 2017, the transfer was completed and REIT Changjiang is now considered as a fully owned subsidiary of Beijing REIT. |
Equity (Details Textual)
Equity (Details Textual) | Aug. 02, 2016USD ($)shares | Aug. 07, 2015USD ($)$ / sharesshares | Nov. 29, 2017USD ($)$ / sharesshares | Nov. 30, 2016USD ($) | Nov. 30, 2016CNY (¥) | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2016CNY (¥)shares | Dec. 31, 2017USD ($)m² | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($)m²$ / sharesshares | Dec. 31, 2015USD ($)m² | Dec. 31, 2015CNY (¥)m² | Jan. 10, 2016 | Jul. 31, 2015 |
Equity (Textual) | ||||||||||||||
Appropriations to the statutory surplus reserve, description | Appropriations to the statutory surplus reserve are 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. | Appropriations to the statutory surplus reserve are 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. | ||||||||||||
Restricted amounts | $ 1,989,475 | $ 1,033,524 | ||||||||||||
Common shares of value issued | 14,270,194 | |||||||||||||
Cash proceeds | 4,457,500 | |||||||||||||
Payments to original shareholders of Beijing REIT | 3,466,260 | |||||||||||||
Capital contribution by the original shareholders | 900,000 | |||||||||||||
Initial public offering shares of common stock | $ 16,100,000 | |||||||||||||
Land use right | m² | 306,000 | 306,000 | 206,667 | 206,667 | ||||||||||
IPO [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Common shares issued | shares | 3,220,000 | |||||||||||||
Common share price | $ / shares | $ 5 | |||||||||||||
Initial public offering shares of common stock | $ 16,100,000 | |||||||||||||
Net proceeds | $ 14,300,000 | |||||||||||||
Unrelated Third Party [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Common share price | $ / shares | $ 4 | |||||||||||||
Common stock to settle a loan payable, shares | shares | 800,000 | 800,000 | ||||||||||||
Common stock to settle a loan payable, amount | $ 3,200,000 | ¥ 21,240,000 | ||||||||||||
Unrelated Investor [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Common shares issued | shares | 900,000 | |||||||||||||
Common shares of value issued | $ 3,600,000 | |||||||||||||
Common share price | $ / shares | $ 4 | |||||||||||||
Incorporator [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Common shares issued | shares | 10,000 | |||||||||||||
Cash proceeds | $ 10 | |||||||||||||
Common share price | $ / shares | $ 0.001 | |||||||||||||
Majority Shareholder [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Common shares issued | shares | 17,830,000 | |||||||||||||
Cash proceeds | $ 0.25 | $ 4,457,500 | ||||||||||||
Payments to original shareholders of Beijing REIT | 3,466,260 | ¥ 24,000,000 | ||||||||||||
REIT Holdings [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Majority shareholders of interest rate | 15.68% | |||||||||||||
Deposit made to Venture Business International | $ 565,000 | |||||||||||||
Non-controlling equity interest value | $ 3,300,000 | |||||||||||||
Beijing REIT [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Equity interest, percentage | 70.00% | |||||||||||||
REIT Xinyi [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Equity interest, percentage | 30.00% | 30.00% | ||||||||||||
Capital contribution from noncontrolling shareholders | $ 2,218,617 | ¥ 15,000,000 | $ 48,240 | ¥ 300,000 | ||||||||||
Land use right | m² | 206,667 | 206,667 | ||||||||||||
Ownership interest | 30.00% | 30.00% | ||||||||||||
REIT Changjiang [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Ownership interest | 84.32% | |||||||||||||
PRC Statutory Laws [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Restricted amounts | $ 1,918,877 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 35,551,016 | $ 32,424,269 | $ 17,384,373 |
Cost of goods sold | 17,588,738 | 18,272,017 | 9,265,313 |
Gross profit | 17,962,278 | 14,152,252 | 8,119,060 |
Interest expense and charges | 1,012,960 | 1,450,389 | 1,032,329 |
Depreciation and amortization | 1,566,739 | 1,361,260 | 1,257,220 |
Capital expenditures | 4,639,003 | 9,372,067 | 2,709,343 |
Income tax expenses | 2,760,080 | 1,952,356 | 295,760 |
Segment profit | 6,646,785 | 4,503,080 | 2,355,615 |
Segment assets | 81,131,829 | 62,660,999 | 50,247,767 |
Machinery and Equipment sales [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 14,484,853 | 13,166,604 | 6,548,866 |
Cost of goods sold | 6,696,230 | 5,423,418 | 3,349,172 |
Gross profit | 7,788,623 | 7,743,186 | 3,199,694 |
Interest expense and charges | 410,214 | 650,727 | 434,307 |
Depreciation and amortization | 207,651 | 189,404 | 42,728 |
Capital expenditures | 107,577 | 87,267 | 85,633 |
Income tax expenses | 1,030,904 | 945,186 | 41,841 |
Segment profit | 3,335,076 | 3,125,268 | 320,253 |
Segment assets | 10,899,522 | 12,870,817 | 9,705,534 |
Construction materials sales [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 19,455,800 | 18,424,613 | 7,941,873 |
Cost of goods sold | 10,300,099 | 12,333,845 | 4,839,944 |
Gross profit | 9,155,701 | 6,090,768 | 3,101,928 |
Interest expense and charges | 601,141 | 795,833 | 598,022 |
Depreciation and amortization | 1,359,088 | 1,170,605 | 1,182,249 |
Capital expenditures | 4,500,485 | 9,284,800 | 2,608,079 |
Income tax expenses | 1,486,371 | 967,221 | 133,647 |
Segment profit | 4,395,629 | 2,830,950 | 733,160 |
Segment assets | 60,000,714 | 47,829,971 | 38,332,912 |
Municipal construction projects [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 250,422 | 1,249,699 | |
Cost of goods sold | 160,324 | 725,934 | |
Gross profit | 90,098 | 523,765 | |
Interest expense and charges | 370 | 282 | |
Depreciation and amortization | 1,251 | 464 | |
Capital expenditures | 30,941 | ||
Income tax expenses | 120,272 | ||
Segment profit | (82,323) | (901,145) | 356,109 |
Segment assets | 567,030 | (186,139) | 777,363 |
Technological consulting and other services [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 1,359,941 | 833,052 | 1,643,935 |
Cost of goods sold | 432,085 | 514,754 | 350,263 |
Gross profit | 927,856 | 318,298 | 1,293,673 |
Interest expense and charges | 1,235 | 3,547 | |
Depreciation and amortization | 31,779 | ||
Capital expenditures | 15,631 | ||
Income tax expenses | 242,805 | 39,949 | |
Segment profit | (1,001,597) | (551,993) | 946,093 |
Segment assets | $ 9,664,563 | $ 2,146,350 | $ 1,431,958 |
Subsequent Events (Details)
Subsequent Events (Details) ¥ in Thousands | Feb. 06, 2018USD ($) | Jan. 16, 2018USD ($) | Apr. 30, 2018USD ($) | Apr. 30, 2018CNY (¥) | Feb. 06, 2018CNY (¥) | Jan. 16, 2018CNY (¥) | Jan. 05, 2018USD ($) | Jan. 05, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Subsequent Events (Textual) | ||||||||||
Borrow an aggregate amount | $ | $ 7,540,381 | $ 5,734,666 | ||||||||
Subsequent Event [Member] | ||||||||||
Subsequent Events (Textual) | ||||||||||
Borrow an aggregate amount | $ 5,000,000 | ¥ 31,500 | ||||||||
Total paid in capital of related party | 55,500 | |||||||||
Subsequent Event [Member] | Maximum [Member] | ||||||||||
Subsequent Events (Textual) | ||||||||||
Increase registered capital | 66 | |||||||||
Subsequent Event [Member] | Minimum [Member] | ||||||||||
Subsequent Events (Textual) | ||||||||||
Increase registered capital | ¥ 24 | |||||||||
Subsequent Event [Member] | Beijing Bank Four [Member] | ||||||||||
Subsequent Events (Textual) | ||||||||||
Borrow an aggregate amount | $ 3,200,000 | ¥ 20,000,000 | ||||||||
Subsequent Event [Member] | Beijing Bank Four [Member] | Short-term bank loan agreement [Member] | ||||||||||
Subsequent Events (Textual) | ||||||||||
Borrow an aggregate amount | $ 1,540,000 | $ 770,000 | ¥ 10,000 | ¥ 5,000 | ||||||
Short term loan, description | The loan bears a fixed interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing plus 92 basis points. | The loan bears a fixed interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 20 basis points. |