Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ReTo Eco-Solutions, Inc. |
Entity Central Index Key | 0001687277 |
Trading Symbol | RETO |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2018 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Ex Transition Period | true |
Entity Shell Company | false |
Entity Emerging Growth Company | true |
Entity Common Stock, Shares Outstanding | 22,760,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 1,477,873 | $ 10,863,040 |
Restricted cash | 85,293 | |
Accounts receivable, net - third parties | 14,725,074 | 18,503,286 |
Accounts receivable, net - related party | 450,473 | |
Advances to suppliers, net - third parties | 4,049,568 | 1,847,637 |
Advances to suppliers, net - related party | 947,557 | |
Inventories | 4,630,312 | 1,611,836 |
Prepaid expenses and other current assets | 974,802 | 774,665 |
Acquisition deposit | 2,181,000 | |
Total Current Assets | 29,521,952 | 33,600,464 |
Property, plant and equipment, net | 41,382,223 | 39,833,280 |
Intangible assets, net | 6,841,513 | 7,401,550 |
Prepayment for construction of properties | 3,707,700 | |
Deferred tax assets | 551,534 | 296,535 |
Total Assets | 82,004,922 | 81,131,829 |
Current Liabilities: | ||
Short term loans, net | 8,858,457 | 7,540,381 |
Long term bank loans - current portion | 436,200 | 4,460,524 |
Advances from customers | 3,565,066 | 7,078,609 |
Deferred revenue | 473,358 | 520,872 |
Accounts payable - third parties | 1,815,496 | 2,506,484 |
Accounts payable - related party | 557,584 | |
Accrued and other liabilities | 1,449,669 | 716,960 |
Taxes payable | 2,964,524 | 3,352,512 |
Due to related parties | 561,313 | 375,697 |
Total Current Liabilities | 20,681,667 | 26,552,039 |
Long term bank loans | 8,142,400 | 2,951,040 |
Total Liabilities | 28,824,067 | 29,503,079 |
Commitments and Contingencies | ||
Equity: | ||
Common Stock, $0.001 par value, 200,000,000 shares authorized, 22,760,000 shares issued and outstanding as of December 31, 2018 and 2017 | 22,760 | 22,760 |
Additional paid-in capital | 42,278,252 | 42,278,252 |
Statutory reserve | 2,632,797 | 1,989,475 |
Accumulated earnings | 9,084,246 | 5,246,950 |
Accumulated other comprehensive loss | (3,105,185) | (216,414) |
Total RETO Eco Solutions Inc. Stockholders' Equity | 50,912,870 | 49,321,023 |
Noncontrolling interest | 2,267,985 | 2,307,727 |
Total Equity | 53,180,855 | 51,628,750 |
Total Liabilities and Equity | $ 82,004,922 | $ 81,131,829 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 22,760,000 | 22,760,000 |
Common stock, shares outstanding | 22,760,000 | 22,760,000 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Revenues | $ 37,569,862 | $ 35,551,016 | $ 32,424,269 |
Cost of goods sold | 20,368,339 | 17,697,286 | 18,371,228 |
Gross Profit | 17,201,523 | 17,853,730 | 14,053,041 |
Operating Expenses | |||
Selling expenses | 1,985,706 | 1,853,705 | 1,580,825 |
General and administrative expenses | 5,265,599 | 4,222,601 | 2,677,800 |
Bad debt expense | 1,952,646 | 876,942 | 1,101,698 |
Research and development expenses | 799,604 | 647,754 | 503,688 |
Total Operating Expenses | 10,003,555 | 7,600,902 | 5,864,011 |
Income from Operations | 7,197,968 | 10,252,828 | 8,189,030 |
Other Expense: | |||
Interest expense | (1,065,287) | (1,012,960) | (1,450,389) |
Other income (expense) | 15,456 | (166,997) | (283,205) |
Total Other Expense, net | (1,049,831) | (845,963) | (1,733,594) |
Income Before Income Taxes | 6,148,137 | 9,406,865 | 6,455,436 |
Provision for Income Taxes | 1,580,455 | 2,760,080 | 1,952,356 |
Net Income | 4,567,682 | 6,646,785 | 4,503,080 |
Less: net income attributable to noncontrolling interest | 87,064 | 668,396 | 399,559 |
Net income attributable to ReTo Eco-Solutions, Inc. | 4,480,618 | 5,978,389 | 4,103,521 |
Net Income | 4,567,682 | 6,646,785 | 4,503,080 |
Other Comprehensive Income (loss): | |||
Foreign currency translation income (loss) | (3,015,577) | 2,109,103 | (1,699,975) |
Comprehensive Income | 1,552,105 | 8,755,888 | 2,803,105 |
Less: comprehensive income (loss) attributable to noncontrolling interest | (39,742) | 1,265,817 | (26,394) |
Comprehensive income attributable to ReTo Eco-Solutions, Inc. | $ 1,591,847 | $ 7,490,071 | $ 2,829,499 |
Earnings per share | |||
Basic and diluted | $ 0.20 | $ 0.35 | $ 0.25 |
Weighted average number of shares | |||
Basic and diluted | 22,760,000 | 19,130,137 | 18,043,836 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Common Stock | Additional paid-in Capital | Statutory Reserve | Accumulated Earnings (Deficit) | Accumulated Other | Noncontrolling Interest | Total |
Beginning balance at Dec. 31, 2015 | $ 17,840 | $ 19,551,388 | $ 349,663 | $ (3,195,148) | $ (454,074) | $ 2,820,037 | $ 19,089,706 |
Beginning balance, shares at Dec. 31, 2015 | 17,840,000 | ||||||
Net income | 4,103,521 | 399,559 | 4,503,080 | ||||
Appropriation to statutory reserve | 683,861 | (683,861) | |||||
Foreign currency translation adjustment | (1,274,022) | (425,953) | (1,699,975) | ||||
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 | |||||
Conversion of loan payable to common stock | $ 800 | 3,199,200 | 3,200,000 | ||||
Conversion of loan payable to common stock, shares | 800,000 | ||||||
Ending balance at Dec. 31, 2016 | $ 18,640 | 23,741,828 | 1,033,524 | 224,512 | (1,728,096) | 5,012,260 | 28,302,668 |
Ending balance, shares at Dec. 31, 2016 | 18,640,000 | ||||||
Net income | 5,978,389 | 668,396 | 6,646,785 | ||||
Appropriation to statutory reserve | 955,951 | (955,951) | |||||
Foreign currency translation adjustment | 1,511,682 | 597,421 | 2,109,103 | ||||
Acquisition of Noncontrolling interest in REIT Changjiang | 670,350 | (3,970,350) | (3,300,000) | ||||
Private placement sale of stock | $ 900 | 3,599,100 | 3,600,000 | ||||
Private placement sale of stock, shares | 900,000 | ||||||
Share issuance - IPO, net | $ 3,220 | 14,266,974 | 14,270,194 | ||||
Share issuance - IPO, net, shares | 3,220,000 | ||||||
Ending balance at Dec. 31, 2017 | $ 22,760 | 42,278,252 | 1,989,475 | 5,246,950 | (216,414) | 2,307,727 | 51,628,750 |
Ending balance, shares at Dec. 31, 2017 | 22,760,000 | ||||||
Net income | 4,480,618 | 87,064 | 4,567,682 | ||||
Appropriation to statutory reserve | 643,322 | (643,322) | |||||
Foreign currency translation adjustment | (2,888,771) | (126,806) | (3,015,577) | ||||
Ending balance at Dec. 31, 2018 | $ 22,760 | $ 42,278,252 | $ 2,632,797 | $ 9,084,246 | $ (3,105,185) | $ 2,267,985 | $ 53,180,855 |
Ending balance, shares at Dec. 31, 2018 | 22,760,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 4,567,682 | $ 6,646,785 | $ 4,503,080 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Deferred tax benefit | (282,010) | (194,045) | (44,685) |
Depreciation and amortization | 1,734,255 | 1,566,739 | 1,361,260 |
Bad debt provisions | 1,952,646 | 876,942 | 1,101,698 |
Changes in operating assets: | |||
Accounts receivable - third parties | 1,338,352 | (3,174,381) | (7,451,292) |
Accounts receivable - related party | (468,752) | ||
Advances to suppliers - third parties | (2,775,574) | 198,355 | (1,761,639) |
Advances to suppliers - related party | (986,006) | ||
Inventories | (3,220,965) | (207,182) | 745,161 |
Prepaid expenses and other current assets | (42,477) | (320,500) | 6,281 |
Changes in operating liabilities: | |||
Advances from customers | (3,226,669) | (1,328,663) | 3,028,340 |
Deferred revenue | (20,173) | (19,733) | (20,067) |
Accounts payable - third parties | (578,181) | (2,113,907) | 231,012 |
Accounts payable - related party | 557,584 | ||
Billings in excess of costs and estimated earnings | (174,038) | ||
Taxes payable | (214,627) | 853,072 | 2,078,982 |
Accrued and other liabilities | 801,212 | (248,546) | 333,863 |
Net cash provided by (used in) operating activities | (903,883) | 2,534,918 | 3,937,956 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Addition of property, equipment and construction in progress | (5,417,535) | (4,639,003) | (9,372,067) |
Purchase of intangible assets | (1,681,870) | ||
Deposit made for acquisition | (2,269,500) | (565,000) | |
Advance payment for construction of properties | (3,858,150) | ||
Acquisition of minority interest | (2,735,000) | ||
Collection on project deposit | 2,317,700 | ||
Net cash used in investing activities | (11,545,185) | (7,374,003) | (9,301,237) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from short-term loans | 10,182,490 | 9,767,793 | 7,597,297 |
Repayment of short-term loans | (8,790,530) | (8,244,905) | (6,772,500) |
Deferred financing costs paid | (98,774) | ||
Proceeds from long-term bank loans | 9,304,950 | 752,500 | |
Repayment of long-term bank loans | (7,454,248) | (3,799,654) | (1,962,331) |
Repayment of bank notes, net | (739,984) | ||
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 | 213,454 | (854,401) | 817,495 |
Capital contribution from noncontrolling shareholders | 2,218,617 | ||
Net cash provided by financing activities | 3,456,116 | 13,999,046 | 6,743,544 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH | (306,922) | (121,912) | (241,896) |
NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH | (9,299,874) | 9,038,046 | 1,138,367 |
CASH AND RESTRICTED CASH, BEGINNING OF YEAR | 10,863,040 | 1,824,994 | 686,627 |
CASH AND RESTRICTED CASH, END OF YEAR | 1,563,166 | 10,863,040 | 1,824,994 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Interest paid | 1,012,174 | 997,948 | 1,430,901 |
Income tax paid | 1,895,202 | 1,903,343 | 719,479 |
Non-Cash Financing Activities | |||
Conversion of investor loan to equity | $ 3,200,000 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [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”). 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. 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”. 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 66 million (approximately $9.7 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 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 16). After this equity transfer, Beijing REIT became a Wholly Foreign-Owned Enterprise (“WFOE”) 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 held an 84.32% equity interest in REIT Changjiang and Venture Business International (“VBI”), a British Virgin Islands company held 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, Beijing 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. On October 22, 2018, REIT Ecological Technology Co., Ltd. (“REIT Yancheng”) was incorporated as a wholly owned subsidiary of REIT Holdings. On December 7, 2018, Lingqiu REIT Dongtian Ecological Technology Co., Ltd. (“REIT Lingqiu”) was incorporated. REIT Eco Engineering owns 51% of its equity interest, with remaining 49% owned by a noncontrolling shareholder. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
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 Incorporation Ownership Percentage 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 Eco Engineering”) 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 % REIT Ecological Technology Co., Ltd. (“REIT Yancheng”) Yancheng, China 100 % Lingqiu REIT Dongtian Ecological Technology Co., Ltd. (“REIT Lingqiu”) Datong, China 51 % Noncontrolling interests As of December 31, 2018, and 2017, noncontrolling interests represent the noncontrolling shareholders’ proportionate share of equity interests in REIT Xinyi, REIT India and REIT Lingqiu. 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 input method, and realization of deferred tax assets. Actual results could differ from those estimates. 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 6.8755 US$1=RMB 6.5062 US$1= RMB 6.9448 Average rate US$1=RMB 6.6090 US$1=RMB 6.7568 US$1= RMB 6.6441 Cash and Cash Equivalents Cash and cash equivalents represent cash on hand and time deposits, which have original maturities of three months or less when purchased and which are unrestricted as to withdrawal and use. In addition, highly liquid investments which have original maturities of three months or less when purchased are classified as 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 bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The restricted cash balance is associated with the Company’s short-term borrowings, thus, classified as a current asset. As of December 31, 2018, and 2017, the Company had restricted cash of $85,293 and $Nil, respectively, related to the bank acceptance notes payable. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts presented in the statement of cash flows. The Company adopted the new standard effective January 1, 2018, using the retrospective transition method. 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, net Advances to suppliers consist of balances paid to suppliers for services and materials that have not been provided or received. Advances to suppliers for service and material are short-term in nature. Advances to Suppliers 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 $871,030 and $534,245 as of December 31, 2018 and 2017, 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 and buildings 30–50 years Machinery equipment 5–15 years Transportation vehicles 5–10 years Office and electronic equipment 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, 2018, 2017 and 2016. 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, 2018 and 2017, 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, 2018 and 2017 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 adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach. Revenues for the year ended December 31, 2018 were presented under ASC 606, and revenues for the years ended December 31, 2017 and 2016 were not adjusted and continue to be presented under ASC Topic 605, Revenue Recognition. There is no adjustment to the opening balance of retained earnings at January 1, 2018 since there is no change to the timing and pattern of revenue recognition upon adoption of ASC 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services. The Company’s revenues are primarily derived from the following sources: ● Revenue from machinery and equipment sales The Company recognizes revenue when the machinery and equipment is delivered and control is transferred. The Company generally provide a warranty for a period of 12 months after the customers receive the equipment. The Company determines that such product warranty is not a separated performance obligation because the nature of warranty is to provide assurance that a product will function as expected and in accordance with customer’s specification and the Company has not sold the warranty separately. From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the years ended December 31, 2018 and 2017. The Company usually agrees with customers on the contracts to holdback approximately 5% to 20% of total contract price as security deposits which are payable by customer within 12 months after the goods are shipped and titles have passed. The Company determines that the timing of collection of security deposit has no impact on revenue recognition, as all above criteria on revenue recognition had been met at the point at delivery and the Company does not retain any substantial performance obligations. The security retention included in the account receivable as of December 31, 2018 and 2017 was Nil and $557,919, respectively. ● Revenue from construction materials sales The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. ● Revenue from municipal construction projects The Company provides municipal construction services which includes sponge city projects, sewage pipeline construction, public plaza construction, and landscaping, etc. The Company recognizes revenue associated with these contracts over time as service is performed and the transfer of control occurs, based on a percentage-of-completion method using cost-to-cost input methods as a measure of progress. When the percentage-of-completion method is used, the Company estimates the costs to complete individual contracts and records as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach). Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. ● Revenue from technological consulting and other services The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers. Disaggregation of Revenues The Company disaggregates its revenue from contracts by products and services, as we believe it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended December 31, 2018 and 2017 is disclosed in Note 17. Shipping and Handling 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 $730,751, $776,438 and $630,218 for the years ended December 31, 2018, 2017 and 2016, 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, 2018, 2017 and 2016. As of December 31, 2018, the tax years ended December 31, 2014 through December 31, 2018 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 16%, starting from May 1, 2018, 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 During the year ended 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 noncontrolling 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, 2018, 2017 and 2016, the Company had no dilutive security outstanding that could potentially dilute EPS in the future. 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, India and BVI, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of December 31, 2018, and 2017, $1,065,774 and $2,018,199 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 $73,540 and $51,634 as of December 31, 2018 and 2017, respectively. The cash balance held in India bank accounts was $90,783 and $Nil as of December 31, 2018 and 2017 respectively. The cash balance held in BVI bank accounts was $245,874 and $8,774,608 as of December 31, 2018 and 2017 respectively. As of December31, 2018 and 2017, the Company held $181 and $3,356 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, 2018, 2017 and 2016, no customer accounted for more than 10% of the Company’s total revenue. As of December 31, 2018, 2017 and 2016, none of account receivable accounted for more than 10% of the total outstanding accounts receivable balance. For the years ended December 31, 2018, 2017 and 2016, the Company purchased approximately 28%, 31% and 41% of its raw materials from one major supplier, respectively. Advanced payments to three major vendors accounted for 20%, 17% and 11% of the total advance payments outstanding as of December 31, 2018. Advanced payments to three major vendors accounted for 23%, 17% and 16% of the total advance payments outstanding as of December 31, 2017. Risks and Uncertainties The main operation of the Company is 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 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 February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S. federal corporate income tax rate resulting from the enactment of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act. The Company does not expect this guidance will have a material impact on its consolidated financial statements. 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. On June 20, 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The new standard is effective for us on January 1, 2019. Early adoption is permitted, including in interim periods, and should be applied to all new awards granted after the date of adoption. The Company does not expect this guidance will have a material impact on its consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect this guidance will have a material impact on its consolidated financial statements. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements of operations and cash flows. |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 3 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following: December 31, December 31, Trade accounts receivable $ 18,404,279 $ 20,319,213 Less: allowances for doubtful accounts (3,228,732 ) (1,815,927 ) Less: accounts receivable, net, related party (Note 15) (450,473 ) - Accounts receivable, net, third parties $ 14,725,074 $ 18,503,286 The Company did not write off any accounts receivable balances as of December 31, 2018 and 2017. The changes of allowance for doubtful accounts for the years ended December 31, 2018 and 2017 are as follow: December 31, December 31, Beginning balance $ 1,815,927 $ 741,187 Bad debt provision 1,572,175 986,787 Foreign exchange translation (159,370 ) 87,953 Ending balance $ 3,228,732 $ 1,815,927 |
Advances to Suppliers, Net
Advances to Suppliers, Net | 12 Months Ended |
Dec. 31, 2018 | |
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 and construction materials for the Company’s construction projects. December 31, December 31, Raw material prepayments for equipment production $ 2,686,314 $ 916,210 Construction material prepayments 2,776,638 1,037,438 Advances to construction subcontractors 405,203 428,334 5,868,155 2,381,882 Less: allowances for doubtful accounts (871,030 ) (534,245 ) Less: Advances to suppliers, net, related party (Note 15) (947,557 ) - Advances to suppliers, net, third parties $ 4,049,568 $ 1,847,637 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
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 5 – INVENTORY Inventories consisted of the following: December 31, December 31, Raw materials $ 1,408,238 $ 1,069,130 Finished goods 3,222,074 542,706 Total inventory $ 4,630,312 $ 1,611,836 |
Acquisition Intention Deposit
Acquisition Intention Deposit | 12 Months Ended |
Dec. 31, 2018 | |
Acquisition Intention Deposit [Abstract] | |
ACQUISITION INTENTION DEPOSIT | NOTE 6 – ACQUISITION INTENTION DEPOSIT On October 8, 2018, REIT Changjiang entered into letter of intention (“LOI”) with a target company for the purpose of a potential acquisition or business cooperation agreement. REIT Changjiang made an advance payment of $2,181,000 (RMB 15 million) to the target company as a deposit. The tentative effective date of the LOI is until August 30, 2019. The deposit is refundable if no agreement would be reached. As of December 31, 2018, the Company presented this balance as an item on its balance sheet and classified it as a current asset. As of the report date, the two parties are still in the negotiation phase. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 7 – 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) $ 809,396 $ 607,822 Prepaid rent expense 25,735 75,943 Value added tax receivable 83,717 86,289 Other 55,954 4,611 Total $ 974,802 $ 774,665 (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. |
Prepayment for Construction of
Prepayment for Construction of Properties | 12 Months Ended |
Dec. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAYMENT FOR CONSTRUCTION OF PROPERTIES | NOTE 8 – PREPAYMENT FOR CONSTRUCTION OF PROPERTIES During the year ended December 31, 2018, the Company made prepayment of $3,707,700 (RMB 25.5 million) to a subcontractor for the construction of facilities in its newly established REIT Yancheng. The Company presented this balance as non-current assets on its balance sheet due to its long-term nature. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 9 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: December 31, 2018 December 31, 2017 Property and buildings $ 42,066,001 $ 28,336,864 Machinery and equipment 4,210,500 4,041,418 Transportation vehicles 979,549 925,945 Office and electronic equipment 893,680 833,105 Subtotal 48,149,730 34,137,332 Construction in progress (“CIP”) 3,530 11,281,422 Less: accumulated depreciation (6,771,037 ) (5,585,474 ) Property and equipment, net $ 41,382,223 $ 39,833,280 As of December 31, 2018, The Company’s properties with an aggregate carrying value of approximately $1.2 million (RMB 8.6 million) has been used as collateral for the Company’s short-term loans (see Note 11). Depreciation expense was $1,584,973, $1,403,585 and $1,185,476 for the years ended December 31, 2018, 2017 and 2016, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | NOTE 10 – INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: December 31, December 31, Land use rights $ 7,705,939 $ 8,145,824 Software 31,730 33,541 Total 7,737,669 8,179,365 Less: accumulated amortization (896,156 ) (777,815 ) Intangible assets, net $ 6,841,513 $ 7,401,550 As of December 31, 2018, land use rights of 26,695 square meters with a carrying value of approximately $0.4 million was pledged to the bank as collateral for the Company’s short-term bank loan (see Note 11). As of December 31, 2018 and 2017, land use rights of 306,000 square meters with a carrying value of approximately $4.9 million and $5.3 million, respectively, was pledged to the bank as collateral for the Company’s long-term bank loan (see Note 12). Amortization expense was $166,850, $163,154 and $175,784 for the years ended December 31, 2018, 2017 and 2016, respectively. Estimated future amortization expense is as follows: Twelve months ending December 31, Amortization expense 2019 160,222 2020 160,205 2021 160,205 2022 160,205 2023 and Thereafter 6,200,676 $ 6,841,513 |
Short-term Loans
Short-term Loans | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
SHORT-TERM LOANS | NOTE 11 – SHORT-TERM LOANS Short-term loans consisted of the following: December 31, December 31, China Merchants Bank (“CMB”) (1) $ 4,362,000 $ 3,074,000 Beijing Bank (“BJB”) (2) 2,908,000 4,611,000 Bank of Communications (“BOC”) (3) 1,454,000 - Haikong Holdings Microfinance Co., Ltd.(“HHMC”) (4) 218,100 - Haikou United Bank (“HUB”) (5) - 122,960 Deferred financing costs (83,643 ) (267,579 ) Total $ 8,858,457 $ 7,540,381 (1) In June 2016, Beijing REIT, entered into a line of credit agreement with CMB to borrow an aggregate of approximately $2.9 million (RMB 20 million) as working capital for one year. The agreement was further renewed in 2017. These loans were fully repaid upon maturity during the year ended December 31, 2018. In May 2018, Beijing REIT entered into a new line of credit agreement with CMB. The agreement allows Beijing REIT to obtain loans up to approximately $4.4 million (RMB 30 million) for use as working capital between May 3, 2018 and May 2, 2020. Pursuant to the agreement, BEIT entered into six loan agreements between May and December, 2018 with CMB to borrow the full amount. These loans have a term of 12 months and bear fixed interest rates ranging from 5.655% to 6.960% per annum. All these loans are guaranteed by a third-party guaranty company and the Chairman and Chief Executive Officer of the Company. Gu’an REIT also pledged its property with a carrying value of approximately $1.0 million (RMB 7.2 million) and land use rights with a carrying value of approximately $0.4 million (RMB 3.1million) as collateral. (2) In January, April, July and October 2017, Beijing REIT entered into a series loan agreement with BJB to borrow an aggregated of approximately $4.6 million (RMB 30 million) as working capital for a period of six months to one year with respective maturity dates. All these loans are either guaranteed by a third-party guaranty company and the principal shareholders of the Company. All the loans were repaid in full upon maturity during the year ended December 31, 2018. In February 2018, Beijing REIT entered into a new line of credit agreement with BJB. The agreement allows Beijing REIT to obtain loans up to approximately $2.9 million (RMB 20 million) as working capital. Pursuit to the agreement, BEIT entered into three loan agreements in February, March and April, 2018 with BJB to borrow the full amount. These loans have a term of 12 months and bear fixed interest rates ranging from 5.22% to 5.4475% per annum. All these loans are guaranteed by a third-party guaranty company and the CEO and principal shareholders of the Company. These loans were fully repaid upon maturity. (3) In September 2018, Beijing REIT entered into a bank loan agreement with BOC to borrow approximately $1.5 million (RMB 10 million) as working capital for one year. The loan bears a fixed interest rate of 5.0025% per annum. The loan is also guaranteed by the principal shareholders of the Company. (4) In December 2018, REIT Changjiang entered into a loan agreement with HHMC to borrow approximately $0.22 million (RMB 1.5 million) as working capital for one year. The loan bears a fixed interest rate of 19.2% per annum. REIT Changjiang pledged its property with a carrying value of approximately $0.2 million (RMB 1.4 million) as collateral. The loan is also guaranteed by the CEO and principal shareholders of the Company. (5) In January 2017, REIT Changjiang entered into a bank loan agreement with HUB to borrow approximately $0.15 million (RMB 1 million) as working capital for one year. During the year ended December 31, 2017, the Company repaid approximately $0.03 million (RMB 200,000) and the remaining loan was repaid upon maturity during the year ended December 31, 2018. For the years ended December 31, 2018, 2017 and 2016, interest expense on all short-term loans amounted to $480,452, $365,964 and $635,875, respectively. |
Long Term Bank Loans
Long Term Bank Loans | 12 Months Ended |
Dec. 31, 2018 | |
Long Term Bank Loans [Abstract] | |
LONG TERM BANK LOANS | NOTE 12 – LONG TERM BANK LOANS December 31, December 31, Long-term bank loan - Industrial and Commercial Bank of China (“ICBC”) (1) $ - $ 7,411,564 Long-term bank loan - Changjiang Li Autonomous County Rural Credit Cooperative Association (“CCCA”) (2) 8,578,600 - Subtotal 8,578,600 7,411,564 Less: current maturities of long-term loan (436,200 ) (4,460,524 ) Long-term loan-noncurrent portion $ 8,142,400 $ 2,951,040 (1) In September 2013, REIT Changjiang entered into a line of credit agreement with ICBC, which allowed REIT Changjiang to borrow up to approximately $13.8 million (RMB 96 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. During the year ended December 31, 2017, the Company repaid approximately $3.1 million (RMB 20.7 million). The remaining balance of approximately $7.4 million (RMB 48.2 million) was repaid in full as of December 31, 2018. (2) In June 2018, REIT Changjiang entered into a loan agreement with CCCA to borrow approximately $8.7 million (RMB $60 million) for expansion of its production facilities. The loan has a term of six years from June 19, 2018 to June 19, 2024 with a fixed interest rate of 7% per annum. REIT Changjiang has pledged its land use right of 306,000 square meters and construction in progress on this land, as well as certain production lines as collateral. RETO and Beijing REIT also pledged their shares in REIT Changjiang of 15.683% and 84.317%, respectively, as collateral to secure the loan. The loan is guaranteed by the CEO and principal shareholders of the Company. During the year ended December 31, 2018, the Company repaid approximately $0.1 million (RMB 1.0 million). For the years ended December 31, 2018, 2017 and 2016, total interest on the Company’s long-term bank loans amounted to $552,804, $585,158 and $795,025, respectively. As of December 31, 2018, the repayment schedule of the Company’s remaining long-term bank loan is as follows: Repayment in RMB Repayment in USD June 19, 2019 $ 1,000,000 $ 145,400 December 19, 2019 2,000,000 290,800 June 19, 2020 2,000,000 290,800 December 19, 2020 6,000,000 872,400 June 19, 2021 6,000,000 872,400 December 19, 2021 7,000,000 1,017,800 June 19, 2022 7,000,000 1,017,800 December 19, 2022 7,000,000 1,017,800 June 19, 2023 7,000,000 1,017,800 December 19, 2023 7,000,000 1,017,800 June 19, 2024 7,000,000 1,017,800 Total $ 59,000,000 $ 8,578,600 |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
TAXES | NOTE 13 – 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%. 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 and 2018. The estimated tax savings as a result of the Company’s preferred tax rates for the years ended December 31, 2018, 2017 and 2016 amounted to $86,898, $266,125 and $196,303, respectively. Per share effect of the tax exemption were $0.004, $0.01 and $0.01 for the years ended December 31, 2018, 2017 and 2016, respectively. The following table reconciles the statutory rate to the Company’s effective tax rate: For the Years ended December 31, 2018 2017 2016 China Statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of favorable income tax rate in certain entity in PRC (1.4 )% (2.8 )% (3.0 )% Non-PRC entities not subject to PRC tax (3) 6.3 % 4.5 % 3.0 % Research & Development (“R&D”) tax credit (1) (1.1 )% (0.3 )% (0.5 )% Non-deductible expenses-permanent difference (2) 0.2 % 0 % 1.1 % Change in valuation allowance (3.3 )% 2.9 % 4.6 % Effective tax rate 25.7 % 29.3 % 30.2 % (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, 2018 2017 2016 Income before income tax expense from China 7,705,629 11,136,874 7,252,723 Loss before income tax expense from outside of China (1,557,492 ) (1,730,009 ) (797,287 ) Total 6,148,137 9,406,865 6,455,436 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, 2018, 2017 and 2016 were as follows: For the Years ended December 31, 2018 2017 2016 Current 1,862,465 2,954,130 1,997,041 Deferred (282,010 ) (194,050 ) (44,685 ) Total 1,580,455 2,760,080 1,952,356 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, 2018 and 2017 were $551,534 and $296,535, 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, 2018 and 2017 was approximately $302,129 and $283,160. Deferred tax asset December 31 December 31, Provision of doubtful accounts $ 551,534 $ 296,535 Tax loss carried forwards 2,031,165 1,729,036 Valuation allowance on tax losses (2,031,165 ) (1,729,036 ) $ 551,534 $ 296,535 (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, 2018 2017 VAT tax payable $ 97,267 $ 191,284 Corporate income tax payable 2,812,063 2,927,254 Land use tax and other taxes payable 55,194 233,974 Total $ 2,964,524 $ 3,352,512 |
Commitments and Contigencies
Commitments and Contigencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTIGENCIES | NOTE 14 – COMMITMENTS AND CONTIGENCIES Lease Obligation The Company’s subsidiaries lease office spaces under operating leases. Operating lease expense amounted to $233,921, $89,785 and $196,330 for the years ended December 31, 2018, 2017 and 2016. Future minimum lease payments under non-cancelable operating leases are as follows: Twelve month ending December 31, 2019 $ 246,684 2020 223,735 2021 230,926 Total $ 701,345 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 was fully completed by December 31, 2018. Contingencies During the year ended December, 31, 2018, REIT Holdings and REIT Changjiang provided guarantee to a related party, Shexian Ruibo Environmental Science and Technology Co., Ltd. (“Shexian Ruibo”) who obtained financing in an amount of RMB 6 million (approximately $0.87 million) (See Note 15). In the event of any legal claims or lawsuits against REIT Holdings and REIT Changjiang due to this guarantee, Mr. Hengfang Li, the Company’s CEO will unconditionally and personally bear all the expenditures and economic losses arising from assuming the above guarantee or make full compensation. The Company believes that any ultimate liability resulting from the outcome of such proceedings, if there is any, will not have a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 15 – RELATED PARTY TRANSACTIONS The Company records transactions with various related parties. These related party balances as of December 31, 2018 and 2017 and transactions for the years ended December 31, 2018 and 2017 are identified as follows: Related Party Balances: As of December 31, 2018 and 2017, the balances due to related parties were as follows: December 31, December 31, Mr. Hengfang Li (1) $ 561,313 $ 375,697 As of December 31, 2018 and 2017, the balances resulting from normal course of business with related parties were as follows: December 31, 2018 December 31, Accounts receivable - Reto International Trading (2) $ 450,473 $ - Advance to supplier - Shexian Ruibo (3) $ 947,557 $ - Accounts payable - Q Green Techcon Private Limited (4) $ 557,584 $ - (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) Reto International Trading Co. Ltd. (“Reto International Trading”) is a related party due to the sole shareholder of Reto International Trading is a greater than 5% shareholder of RETO. (3) Shexian Ruibo is a related party because the majority shareholder of Shexian Ruibo was a greater than 5% shareholder of RETO in 2018. (4) Q Green Techcon Private Limited is the minority Shareholder of REIT India and holds 49% of REIT India’s equity. The Company’s principal shareholders also provide personal guarantees for the Company’s short-term loans (Note 9) and long-term bank loans (Note 11). 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). On November 8, 2018, Shexian Ruibo borrowed RMB 6 million (approximately $0.87 million) from an individual investor through Fusheng (Beijing) Capital Investment Consulting Co., Ltd (“Fusheng Capital”) with an interest rate of 14% per annum, which was guaranteed by REIT Holdings and REIT Changjiang. On January 5, 2019, Shexian Ruibo terminated this financing entrustment contract with Fusheng Capital (See Note 14). Related Party Sales and Purchase Transactions: The Company also makes regular sales to various related parties, as well as making purchase from a related party during the normal course of business. The total sales and purchase with related parties for the years ended December 31, 2018, 2017 and 2016, were as follows: For the years ended December 31, 2018 2017 2016 Sales to related parties Zhongrong Honghe Eco Construction Materials Co., Ltd (1) $ 567,812 $ - $ - Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. (2) 233,559 - - Reto International Trading Co. Ltd. 1,139,440 - - Total $ 1,940,811 $ - $ - Purchase from a relate party Shexian Ruibo Environmental Science and Technology Co., Ltd. 5,843,564 - - Total $ 5,843,564 $ - $ - (1) Zhongrong Honghe Eco Construction Materials Co., Ltd. is an entity controlled by the CEO’s wife. (2) Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. is an entity controlled by the CEO’s wife. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
EQUITY | NOTE 16 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 $2,632,797 as of December 31, 2018. 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, 2018 and December 31, 2017 is as follows: December 31, December 31, 2018 2017 Beginning balance $ 2,307,727 $ 5,012,260 Proportionate share of net income 87,064 668,396 Acquisition of noncontrolling interests in REIT Changjiang (a) - (3,970,350 ) Foreign currency translation adjustment (126,806 ) 597,421 Noncontrolling interest, ending balance $ 2,267,985 $ 2,307,727 (a) 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, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 17 – 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, 2018, 2017 and 2016, respectively: For the year ended December 31, 2018 Machinery Construction Municipal Technological consulting Total Revenues $ 17,453,324 $ 18,805,539 $ 720,191 $ 590,808 $ 37,569,862 Cost of goods sold 8,050,742 11,600,016 537,076 180,505 20,368,339 Gross profit 9,402,582 7,205,523 183,115 410,303 17,201,523 Interest expense and charges 478,515 583,123 329 3,320 1,065,287 Depreciation and amortization 212,819 1,508,016 13,420 - 1,734,255 Capital expenditures 242,077 9,033,608 - - 9,275,685 Income tax expenses 294,283 1,283,697 1,675 800 1,580,455 Segment profit (loss) 2,687,222 3,613,721 (68,077 ) (1,665,184 ) 4,567,682 Segment assets as of December 31, 2018 $ 21,156,682 $ 59,083,126 $ 716,909 $ 893,878 $ 81,850,595 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 6,735,906 10,368,972 160,324 432,084 17,697,286 Gross profit 7,748,947 9,086,828 90,098 927,857 17,853,730 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 and Equipment sales Construction materials sales Municipal construction projects Technological consulting and other services Total Revenues $ 13,166,604 $ 18,424,613 $ - $ 833,052 $ 32,424,269 Cost of goods sold 5,456,102 12,400,372 - 514,754 18,371,228 Gross profit 7,710,502 6,024,241 - 318,298 14,053,041 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 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 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 18 – SUBSEQUENT EVENTS On January 11, 2019, the Company filed a Form S-8 to register an aggregate of 2,000,000 common shares with par value of $0.001 per share, which is expected to issued and authorized under the Company’s 2018 Share Incentive Plan. In January, February and April 2019, the Company entered into three short-term loan agreements with Bank of Beijing to borrow an aggregate amount of approximately $2.2 million (RMB 15.0 million). In March 2019, the Company signed a long-term loan agreement with Dongfang Rural Credit Cooperative to borrow approximately $727,000 (RMB 5.0 million). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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 Incorporation Ownership Percentage 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 Eco Engineering”) 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 % REIT Ecological Technology Co., Ltd. (“REIT Yancheng”) Yancheng, China 100 % Lingqiu REIT Dongtian Ecological Technology Co., Ltd. (“REIT Lingqiu”) Datong, China 51 % |
Noncontrolling interests | Noncontrolling interests As of December 31, 2018, and 2017, noncontrolling interests represent the noncontrolling shareholders’ proportionate share of equity interests in REIT Xinyi, REIT India and REIT Lingqiu. |
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 input method, and realization of deferred tax assets. Actual results could differ from those estimates. |
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, December 31, December 31, Year-end spot rate US$1=RMB 6.8755 US$1=RMB 6.5062 US$1= RMB 6.9448 Average rate US$1=RMB 6.6090 US$1=RMB 6.7568 US$1= RMB 6.6441 |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents represent cash on hand and time deposits, which have original maturities of three months or less when purchased and which are unrestricted as to withdrawal and use. In addition, highly liquid investments which have original maturities of three months or less when purchased are classified as 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 bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The restricted cash balance is associated with the Company’s short-term borrowings, thus, classified as a current asset. As of December 31, 2018, and 2017, the Company had restricted cash of $85,293 and $Nil, respectively, related to the bank acceptance notes payable. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts presented in the statement of cash flows. The Company adopted the new standard effective January 1, 2018, using the retrospective transition method. |
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, net | Advances to Suppliers, net Advances to suppliers consist of balances paid to suppliers for services and materials that have not been provided or received. Advances to suppliers for service and material are short-term in nature. Advances to Suppliers 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 $871,030 and $534,245 as of December 31, 2018 and 2017, 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 and buildings 30–50 years Machinery equipment 5–15 years Transportation vehicles 5–10 years Office and electronic equipment 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, 2018, 2017 and 2016. |
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, 2018 and 2017, 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, 2018 and 2017 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 adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach. Revenues for the year ended December 31, 2018 were presented under ASC 606, and revenues for the years ended December 31, 2017 and 2016 were not adjusted and continue to be presented under ASC Topic 605, Revenue Recognition. There is no adjustment to the opening balance of retained earnings at January 1, 2018 since there is no change to the timing and pattern of revenue recognition upon adoption of ASC 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services. The Company’s revenues are primarily derived from the following sources: ● Revenue from machinery and equipment sales The Company recognizes revenue when the machinery and equipment is delivered and control is transferred. The Company generally provide a warranty for a period of 12 months after the customers receive the equipment. The Company determines that such product warranty is not a separated performance obligation because the nature of warranty is to provide assurance that a product will function as expected and in accordance with customer’s specification and the Company has not sold the warranty separately. From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the years ended December 31, 2018 and 2017. The Company usually agrees with customers on the contracts to holdback approximately 5% to 20% of total contract price as security deposits which are payable by customer within 12 months after the goods are shipped and titles have passed. The Company determines that the timing of collection of security deposit has no impact on revenue recognition, as all above criteria on revenue recognition had been met at the point at delivery and the Company does not retain any substantial performance obligations. The security retention included in the account receivable as of December 31, 2018 and 2017 was Nil and $557,919, respectively. ● Revenue from construction materials sales The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. ● Revenue from municipal construction projects The Company provides municipal construction services which includes sponge city projects, sewage pipeline construction, public plaza construction, and landscaping, etc. The Company recognizes revenue associated with these contracts over time as service is performed and the transfer of control occurs, based on a percentage-of-completion method using cost-to-cost input methods as a measure of progress. When the percentage-of-completion method is used, the Company estimates the costs to complete individual contracts and records as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach). Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. ● Revenue from technological consulting and other services The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers. Disaggregation of Revenues The Company disaggregates its revenue from contracts by products and services, as we believe it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended December 31, 2018 and 2017 is disclosed in Note 17. |
Shipping and Handling | Shipping and Handling 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 $730,751, $776,438 and $630,218 for the years ended December 31, 2018, 2017 and 2016, 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, 2018, 2017 and 2016. As of December 31, 2018, the tax years ended December 31, 2014 through December 31, 2018 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 16%, starting from May 1, 2018, 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 During the year ended 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 noncontrolling 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, 2018, 2017 and 2016, the Company had no dilutive security outstanding that could potentially dilute EPS in the future. |
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, India and BVI, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of December 31, 2018, and 2017, $1,065,774 and $2,018,199 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 $73,540 and $51,634 as of December 31, 2018 and 2017, respectively. The cash balance held in India bank accounts was $90,783 and $Nil as of December 31, 2018 and 2017 respectively. The cash balance held in BVI bank accounts was $245,874 and $8,774,608 as of December 31, 2018 and 2017 respectively. As of December31, 2018 and 2017, the Company held $181 and $3,356 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, 2018, 2017 and 2016, no customer accounted for more than 10% of the Company’s total revenue. As of December 31, 2018, 2017 and 2016, none of account receivable accounted for more than 10% of the total outstanding accounts receivable balance. For the years ended December 31, 2018, 2017 and 2016, the Company purchased approximately 28%, 31% and 41% of its raw materials from one major supplier, respectively. Advanced payments to three major vendors accounted for 20%, 17% and 11% of the total advance payments outstanding as of December 31, 2018. Advanced payments to three major vendors accounted for 23%, 17% and 16% of the total advance payments outstanding as of December 31, 2017. |
Risks and Uncertainties | Risks and Uncertainties The main operation of the Company is 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 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 February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S. federal corporate income tax rate resulting from the enactment of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act. The Company does not expect this guidance will have a material impact on its consolidated financial statements. 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. On June 20, 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The new standard is effective for us on January 1, 2019. Early adoption is permitted, including in interim periods, and should be applied to all new awards granted after the date of adoption. The Company does not expect this guidance will have a material impact on its consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect this guidance will have a material impact on its consolidated financial statements. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements of operations and cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of all inter-company balances and transactions | Name of the entity Place of Incorporation Ownership Percentage 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 Eco Engineering”) 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 % REIT Ecological Technology Co., Ltd. (“REIT Yancheng”) Yancheng, China 100 % Lingqiu REIT Dongtian Ecological Technology Co., Ltd. (“REIT Lingqiu”) Datong, China 51 % |
Schedule of currency exchange rates that were used in creating the consolidated financial statements | December 31, December 31, December 31, Year-end spot rate US$1=RMB 6.8755 US$1=RMB 6.5062 US$1= RMB 6.9448 Average rate US$1=RMB 6.6090 US$1=RMB 6.7568 US$1= RMB 6.6441 |
Schedule of estimated useful lives of the assets | Useful life Property and buildings 30–50 years Machinery equipment 5–15 years Transportation vehicles 5–10 years Office and electronic equipment 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 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivable, net | December 31, December 31, Trade accounts receivable $ 18,404,279 $ 20,319,213 Less: allowances for doubtful accounts (3,228,732 ) (1,815,927 ) Less: accounts receivable, net, related party (Note 15) (450,473 ) - Accounts receivable, net, third parties $ 14,725,074 $ 18,503,286 |
Schedule of allowance for doubtful accounts | December 31, December 31, Beginning balance $ 1,815,927 $ 741,187 Bad debt provision 1,572,175 986,787 Foreign exchange translation (159,370 ) 87,953 Ending balance $ 3,228,732 $ 1,815,927 |
Advances to Suppliers, Net (Tab
Advances to Suppliers, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Advances to Suppliers, Net [Abstract] | |
Schedule of advances to suppliers | December 31, December 31, Raw material prepayments for equipment production $ 2,686,314 $ 916,210 Construction material prepayments 2,776,638 1,037,438 Advances to construction subcontractors 405,203 428,334 5,868,155 2,381,882 Less: allowances for doubtful accounts (871,030 ) (534,245 ) Less: Advances to suppliers, net, related party (Note 15) (947,557 ) - Advances to suppliers, net, third parties $ 4,049,568 $ 1,847,637 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | December 31, December 31, Raw materials $ 1,408,238 $ 1,069,130 Finished goods 3,222,074 542,706 Total inventory $ 4,630,312 $ 1,611,836 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Schedule of prepaid expenses and other current assets | December 31, December 31, Other receivable (1) $ 809,396 $ 607,822 Prepaid rent expense 25,735 75,943 Value added tax receivable 83,717 86,289 Other 55,954 4,611 Total $ 974,802 $ 774,665 (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. |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment, net | December 31, 2018 December 31, 2017 Property and buildings $ 42,066,001 $ 28,336,864 Machinery and equipment 4,210,500 4,041,418 Transportation vehicles 979,549 925,945 Office and electronic equipment 893,680 833,105 Subtotal 48,149,730 34,137,332 Construction in progress (“CIP”) 3,530 11,281,422 Less: accumulated depreciation (6,771,037 ) (5,585,474 ) Property and equipment, net $ 41,382,223 $ 39,833,280 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intagible assets, net | December 31, December 31, Land use rights $ 7,705,939 $ 8,145,824 Software 31,730 33,541 Total 7,737,669 8,179,365 Less: accumulated amortization (896,156 ) (777,815 ) Intangible assets, net $ 6,841,513 $ 7,401,550 |
Schedule of estimated future amortization expense | Twelve months ending December 31, Amortization expense 2019 160,222 2020 160,205 2021 160,205 2022 160,205 2023 and Thereafter 6,200,676 $ 6,841,513 |
Short-term Loans (Tables)
Short-term Loans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of short-term loans | December 31, December 31, China Merchants Bank (“CMB”) (1) $ 4,362,000 $ 3,074,000 Beijing Bank (“BJB”) (2) 2,908,000 4,611,000 Bank of Communications (“BOC”) (3) 1,454,000 - Haikong Holdings Microfinance Co., Ltd.(“HHMC”) (4) 218,100 - Haikou United Bank (“HUB”) (5) - 122,960 Deferred financing costs (83,643 ) (267,579 ) Total $ 8,858,457 $ 7,540,381 (1) In June 2016, Beijing REIT, entered into a line of credit agreement with CMB to borrow an aggregate of approximately $2.9 million (RMB 20 million) as working capital for one year. The agreement was further renewed in 2017. These loans were fully repaid upon maturity during the year ended December 31, 2018. In May 2018, Beijing REIT entered into a new line of credit agreement with CMB. The agreement allows Beijing REIT to obtain loans up to approximately $4.4 million (RMB 30 million) for use as working capital between May 3, 2018 and May 2, 2020. Pursuant to the agreement, BEIT entered into six loan agreements between May and December, 2018 with CMB to borrow the full amount. These loans have a term of 12 months and bear fixed interest rates ranging from 5.655% to 6.960% per annum. All these loans are guaranteed by a third-party guaranty company and the Chairman and Chief Executive Officer of the Company. Gu’an REIT also pledged its property with a carrying value of approximately $1.0 million (RMB 7.2 million) and land use rights with a carrying value of approximately $0.4 million (RMB 3.1million) as collateral. (2) In January, April, July and October 2017, Beijing REIT entered into a series loan agreement with BJB to borrow an aggregated of approximately $4.6 million (RMB 30 million) as working capital for a period of six months to one year with respective maturity dates. All these loans are either guaranteed by a third-party guaranty company and the principal shareholders of the Company. All the loans were repaid in full upon maturity during the year ended December 31, 2018. In February 2018, Beijing REIT entered into a new line of credit agreement with BJB. The agreement allows Beijing REIT to obtain loans up to approximately $2.9 million (RMB 20 million) as working capital. Pursuit to the agreement, BEIT entered into three loan agreements in February, March and April, 2018 with BJB to borrow the full amount. These loans have a term of 12 months and bear fixed interest rates ranging from 5.22% to 5.4475% per annum. All these loans are guaranteed by a third-party guaranty company and the CEO and principal shareholders of the Company. These loans were fully repaid upon maturity. (3) In September 2018, Beijing REIT entered into a bank loan agreement with BOC to borrow approximately $1.5 million (RMB 10 million) as working capital for one year. The loan bears a fixed interest rate of 5.0025% per annum. The loan is also guaranteed by the principal shareholders of the Company. (4) In December 2018, REIT Changjiang entered into a loan agreement with HHMC to borrow approximately $0.22 million (RMB 1.5 million) as working capital for one year. The loan bears a fixed interest rate of 19.2% per annum. REIT Changjiang pledged its property with a carrying value of approximately $0.2 million (RMB 1.4 million) as collateral. The loan is also guaranteed by the CEO and principal shareholders of the Company. (5) In January 2017, REIT Changjiang entered into a bank loan agreement with HUB to borrow approximately $0.15 million (RMB 1 million) as working capital for one year. During the year ended December 31, 2017, the Company repaid approximately $0.03 million (RMB 200,000) and the remaining loan was repaid upon maturity during the year ended December 31, 2018. |
Long Term Bank Loans (Tables)
Long Term Bank Loans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 Long-term bank loan - Changjiang Li Autonomous County Rural Credit Cooperative Association (“CCCA”) (2) 8,578,600 - Subtotal 8,578,600 7,411,564 Less: current maturities of long-term loan (436,200 ) (4,460,524 ) Long-term loan-noncurrent portion $ 8,142,400 $ 2,951,040 (1) In September 2013, REIT Changjiang entered into a line of credit agreement with ICBC, which allowed REIT Changjiang to borrow up to approximately $13.8 million (RMB 96 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. During the year ended December 31, 2017, the Company repaid approximately $3.1 million (RMB 20.7 million). The remaining balance of approximately $7.4 million (RMB 48.2 million) was repaid in full as of December 31, 2018. (2) In June 2018, REIT Changjiang entered into a loan agreement with CCCA to borrow approximately $8.7 million (RMB $60 million) for expansion of its production facilities. The loan has a term of six years from June 19, 2018 to June 19, 2024 with a fixed interest rate of 7% per annum. REIT Changjiang has pledged its land use right of 306,000 square meters and construction in progress on this land, as well as certain production lines as collateral. RETO and Beijing REIT also pledged their shares in REIT Changjiang of 15.683% and 84.317%, respectively, as collateral to secure the loan. The loan is guaranteed by the CEO and principal shareholders of the Company. During the year ended December 31, 2018, the Company repaid approximately $0.1 million (RMB 1.0 million). |
Schedule of repayment of the company's remaining long-term bank loan | Repayment in RMB Repayment in USD June 19, 2019 $ 1,000,000 $ 145,400 December 19, 2019 2,000,000 290,800 June 19, 2020 2,000,000 290,800 December 19, 2020 6,000,000 872,400 June 19, 2021 6,000,000 872,400 December 19, 2021 7,000,000 1,017,800 June 19, 2022 7,000,000 1,017,800 December 19, 2022 7,000,000 1,017,800 June 19, 2023 7,000,000 1,017,800 December 19, 2023 7,000,000 1,017,800 June 19, 2024 7,000,000 1,017,800 Total $ 59,000,000 $ 8,578,600 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciles the statutory rate to the Company's effective tax rate | For the Years ended December 31, 2018 2017 2016 China Statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of favorable income tax rate in certain entity in PRC (1.4 )% (2.8 )% (3.0 )% Non-PRC entities not subject to PRC tax (3) 6.3 % 4.5 % 3.0 % Research & Development (“R&D”) tax credit (1) (1.1 )% (0.3 )% (0.5 )% Non-deductible expenses-permanent difference (2) 0.2 % 0 % 1.1 % Change in valuation allowance (3.3 )% 2.9 % 4.6 % Effective tax rate 25.7 % 29.3 % 30.2 % (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, 2018 2017 2016 Income before income tax expense from China 7,705,629 11,136,874 7,252,723 Loss before income tax expense from outside of China (1,557,492 ) (1,730,009 ) (797,287 ) Total 6,148,137 9,406,865 6,455,436 |
Schedule of income tax provision (benefit) | For the Years ended December 31, 2018 2017 2016 Current 1,862,465 2,954,130 1,997,041 Deferred (282,010 ) (194,050 ) (44,685 ) Total 1,580,455 2,760,080 1,952,356 |
Schedule of deferred tax asset | Deferred tax asset December 31 December 31, Provision of doubtful accounts $ 551,534 $ 296,535 Tax loss carried forwards 2,031,165 1,729,036 Valuation allowance on tax losses (2,031,165 ) (1,729,036 ) $ 551,534 $ 296,535 |
Schedule of taxes payable | December 31, December 31, 2018 2017 VAT tax payable $ 97,267 $ 191,284 Corporate income tax payable 2,812,063 2,927,254 Land use tax and other taxes payable 55,194 233,974 Total $ 2,964,524 $ 3,352,512 |
Commitments and Contigencies (T
Commitments and Contigencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | Twelve month ending December 31, 2019 $ 246,684 2020 223,735 2021 230,926 Total $ 701,345 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of due to related parties | December 31, December 31, Mr. Hengfang Li (1) $ 561,313 $ 375,697 (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 the balances resulting from normal course of business with related parties | December 31, 2018 December 31, Accounts receivable - Reto International Trading (2) $ 450,473 $ - Advance to supplier - Shexian Ruibo (3) $ 947,557 $ - Accounts payable - Q Green Techcon Private Limited (4) $ 557,584 $ - (2) Reto International Trading Co. Ltd. (“Reto International Trading”) is a related party due to the sole shareholder of Reto International Trading is a greater than 5% shareholder of RETO. (3) Shexian Ruibo is a related party because the majority shareholder of Shexian Ruibo was a greater than 5% shareholder of RETO in 2018. (4) Q Green Techcon Private Limited is the minority Shareholder of REIT India and holds 49% of REIT India’s equity. |
Schedule of sales and purchase with related parties | For the years ended December 31, 2018 2017 2016 Sales to related parties Zhongrong Honghe Eco Construction Materials Co., Ltd (1) $ 567,812 $ - $ - Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. (2) 233,559 - - Reto International Trading Co. Ltd. 1,139,440 - - Total $ 1,940,811 $ - $ - Purchase from a relate party Shexian Ruibo Environmental Science and Technology Co., Ltd. 5,843,564 - - Total $ 5,843,564 $ - $ - (1) Zhongrong Honghe Eco Construction Materials Co., Ltd. is an entity controlled by the CEO’s wife. (2) Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. is an entity controlled by the CEO’s wife. |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of reconciliation of noncontrolling interest | December 31, December 31, 2018 2017 Beginning balance $ 2,307,727 $ 5,012,260 Proportionate share of net income 87,064 668,396 Acquisition of noncontrolling interests in REIT Changjiang (a) - (3,970,350 ) Foreign currency translation adjustment (126,806 ) 597,421 Noncontrolling interest, ending balance $ 2,267,985 $ 2,307,727 (a) 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 (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of information by segment | For the year ended December 31, 2018 Machinery Construction Municipal Technological consulting Total Revenues $ 17,453,324 $ 18,805,539 $ 720,191 $ 590,808 $ 37,569,862 Cost of goods sold 8,050,742 11,600,016 537,076 180,505 20,368,339 Gross profit 9,402,582 7,205,523 183,115 410,303 17,201,523 Interest expense and charges 478,515 583,123 329 3,320 1,065,287 Depreciation and amortization 212,819 1,508,016 13,420 - 1,734,255 Capital expenditures 242,077 9,033,608 - - 9,275,685 Income tax expenses 294,283 1,283,697 1,675 800 1,580,455 Segment profit (loss) 2,687,222 3,613,721 (68,077 ) (1,665,184 ) 4,567,682 Segment assets as of December 31, 2018 $ 21,156,682 $ 59,083,126 $ 716,909 $ 893,878 $ 81,850,595 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 6,735,906 10,368,972 160,324 432,084 17,697,286 Gross profit 7,748,947 9,086,828 90,098 927,857 17,853,730 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 and Equipment sales Construction materials sales Municipal construction projects Technological consulting and other services Total Revenues $ 13,166,604 $ 18,424,613 $ - $ 833,052 $ 32,424,269 Cost of goods sold 5,456,102 12,400,372 - 514,754 18,371,228 Gross profit 7,710,502 6,024,241 - 318,298 14,053,041 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 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 |
Organization and Description _2
Organization and Description of Business (Details) | Feb. 07, 2016USD ($)$ / sharesshares | Nov. 29, 2017USD ($)$ / sharesshares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015CNY (¥) | Dec. 07, 2018 | Nov. 08, 2018 | Feb. 29, 2016 | Feb. 07, 2016CNY (¥) | Jul. 15, 2015 | Nov. 22, 2011USD ($) | Nov. 22, 2011CNY (¥) | May 12, 1999USD ($)ShareholdersSubsidiaries | May 12, 1999CNY (¥)ShareholdersSubsidiaries |
Organization and Description of Business (Textual) | ||||||||||||||||
Owners equity interest rate | 14.00% | |||||||||||||||
Additional paid-in capital | $ 42,278,252 | $ 42,278,252 | ||||||||||||||
Number of shareholders | Shareholders | 4 | 4 | ||||||||||||||
Number of subsidiaries | Subsidiaries | 5 | 5 | ||||||||||||||
Carrying value of equity | 1,477,873 | 10,863,040 | ||||||||||||||
Common shares of value issued | 14,270,194 | |||||||||||||||
Gross proceeds from the offering | $ 16,100,000 | |||||||||||||||
Proceeds from issuance of shares | $ 4,457,500 | |||||||||||||||
Equity Transfer Agreement [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Company issued shares | shares | 17,830,000 | |||||||||||||||
Common share price | $ / shares | $ 0.25 | |||||||||||||||
Proceeds from issuance of shares | $ 4,457,500 | |||||||||||||||
Beijing Reit Technology Development Co Ltd [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Registered capital | $ 9,700,000 | |||||||||||||||
Additional paid-in capital | $ 15,400,000 | |||||||||||||||
Majority shareholders of interest rate | 84.32% | |||||||||||||||
Beijing Reit Technology Development Co Ltd [Member] | RMB [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Registered capital | ¥ | ¥ 66,000,000 | |||||||||||||||
Additional paid-in capital | ¥ | ¥ 100,000,000 | |||||||||||||||
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 | |||||||||||||||
Payment of original shareholders | $ 3,466,260 | |||||||||||||||
Reit Holdings [Member] | RMB [Member] | Equity Transfer Agreement [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Carrying value of equity | ¥ | ¥ 24,000,000 | |||||||||||||||
Payment of original shareholders | ¥ | ¥ 24,000,000 | |||||||||||||||
Reit Changjiang [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Owners equity interest rate | 84.32% | 84.32% | ||||||||||||||
Registered capital | $ 16,000,000 | |||||||||||||||
Majority shareholders of interest rate | 15.68% | |||||||||||||||
Non-controlling equity interest value | $ 3,300,000 | |||||||||||||||
Reit Changjiang [Member] | RMB [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Registered capital | ¥ | ¥ 100,000,000 | |||||||||||||||
Reit Xinyi [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Owners equity interest rate | 30.00% | 51.00% | 70.00% | |||||||||||||
Noncontrolling shareholder, Percentage | 49.00% | 30.00% | ||||||||||||||
Reit India [Member] | ||||||||||||||||
Organization and Description of Business (Textual) | ||||||||||||||||
Owners equity interest rate | 51.00% | |||||||||||||||
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 | |||||||||||||||
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 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2018 | |
ReTo Eco-Solutions, Inc. ("RETO") [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | British Virgin Islands |
Ownership Percentage | 100.00% |
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% |
REIT Ecological Technology Co., Ltd. (“REIT Yancheng”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Yancheng, China |
Ownership Percentage | 100.00% |
Lingqiu REIT Dongtian Ecological Technology Co., Ltd. (“REIT Lingqiu”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of Incorporation | Datong, China |
Ownership Percentage | 51.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Year-end spot rate | 1 | 1 | 1 |
Average rate | 1 | 1 | 1 |
RMB [Member] | |||
Year-end spot rate | 6.8755 | 6.5062 | 6.9448 |
Average rate | 6.6090 | 6.7568 | 6.6441 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2018 | |
Property and buildings [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 30 years |
Property and buildings [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 and electronic equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 3 years |
Office and electronic equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment , Useful life | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) | 12 Months Ended |
Dec. 31, 2018 | |
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 Accoun_8
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies (Textual) | |||
Restricted cash | $ 85,293 | ||
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 | $ 871,030 | 534,245 | |
Impairment assets | $ 0 | 0 | $ 0 |
Security retention, description | The Company usually agrees with customers on the contracts to holdback approximately 5% to 20% of total contract price as security deposits which are payable by customer within 12 months after the goods are shipped and titles have passed. | ||
Security retention, amount | 557,919 | ||
Revenues | 37,569,862 | 35,551,016 | 32,424,269 |
Shipping and handling expenses | $ 730,751 | 776,438 | $ 630,218 |
Value added tax percentage | 16.00% | ||
Cash and cash equivalents | $ 1,477,873 | 10,863,040 | |
Held in cash balance | 90,783 | ||
FDIC insurance limits | $ 250,000 | ||
Supplier, description | For the years ended December 31, 2018, 2017 and 2016, the Company purchased approximately 28%, 31% and 41% of its raw materials from one major supplier, respectively. | ||
Vendors, description | Advanced payments to three major vendors accounted for 20%, 17% and 11% of the total advance payments outstanding as of December 31, 2018. Advanced payments to three major vendors accounted for 23%, 17% and 16% of the total advance payments outstanding as of December 31, 2017. | ||
United States [Memebr] | |||
Summary of Significant Accounting Policies (Textual) | |||
Held in cash balance | $ 181 | 3,356 | |
BVI [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Held in cash balance | 245,874 | 8,774,608 | |
Hong Kong [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Held in cash balance | $ 73,540 | $ 51,634 | |
REIT Changjiang [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Non-controlling equity interest percentage | 15.68% | ||
Accounts Receivable [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, Percentage | 10.00% | 10.00% | 10.00% |
Sales Revenue, Net [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, Percentage | 10.00% | 10.00% | 10.00% |
Federal Deposit Insurance Corporation [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Cash and cash equivalents | $ 1,065,774 | $ 2,018,199 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | |||
Trade accounts receivable | $ 18,404,279 | $ 20,319,213 | |
Less: allowances for doubtful accounts | (3,228,732) | (1,815,927) | $ (741,187) |
Less: accounts receivable, net, related party (Note 15) | (450,473) | ||
Accounts receivable, net, third parties | $ 14,725,074 | $ 18,503,286 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Receivables [Abstract] | ||
Beginning balance | $ 1,815,927 | $ 741,187 |
Bad debt provision | 1,572,175 | 986,787 |
Foreign exchange translation | (159,370) | 87,953 |
Ending balance | $ 3,228,732 | $ 1,815,927 |
Advances to Suppliers, Net (Det
Advances to Suppliers, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Advances to Suppliers, Net [Abstract] | ||
Raw material prepayments for equipment production | $ 2,686,314 | $ 916,210 |
Construction material prepayments | 2,776,638 | 1,037,438 |
Advances to construction subcontractors | 405,203 | 428,334 |
Subtotal | 5,868,155 | 2,381,882 |
Less: allowances for doubtful accounts | (871,030) | (534,245) |
Less: Advances to suppliers, net, related party (Note 15) | 947,557 | |
Advances to suppliers, net, third parties | $ 4,049,568 | $ 1,847,637 |
Advances to Suppliers, Net (D_2
Advances to Suppliers, Net (Details Textual) | 12 Months Ended |
Dec. 31, 2018 | |
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 (Details)
Inventory (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,408,238 | $ 1,069,130 |
Finished goods | 3,222,074 | 542,706 |
Total inventory | $ 4,630,312 | $ 1,611,836 |
Acquisition Intention Deposit (
Acquisition Intention Deposit (Details) | Dec. 31, 2018USD ($) | Oct. 08, 2018USD ($) | Oct. 08, 2018CNY (¥) | Dec. 31, 2017USD ($) |
Acquisition Intention Deposit (Textual) | ||||
Acquisition advance payment | $ | $ 2,181,000 | $ 2,181,000 | ||
RMB [Member] | ||||
Acquisition Intention Deposit (Textual) | ||||
Acquisition advance payment | ¥ | ¥ 15,000,000 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |||
Other receivable | [1] | $ 809,396 | $ 607,822 |
Prepaid rent expense | 25,735 | 75,943 | |
Value added tax receivable | 83,717 | 86,289 | |
Other | 55,954 | 4,611 | |
Total | $ 974,802 | $ 774,665 | |
[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. |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets (Details Textual) | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets (Textual) | |
Lease, Description | 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. |
Prepayment for Construction o_2
Prepayment for Construction of Properties (Details) - 12 months ended Dec. 31, 2018 | USD ($) | CNY (¥) |
Prepayment for Construction of Properties (Textual) | ||
Prepayment to sub contractors | $ | $ 3,707,700 | |
RMB [Member] | ||
Prepayment for Construction of Properties (Textual) | ||
Prepayment to sub contractors | ¥ | ¥ 25,500,000 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 48,149,730 | $ 34,137,332 |
Construction in progress ("CIP") | 3,530 | 11,281,422 |
Less: accumulated depreciation | (6,771,037) | (5,585,474) |
Property and equipment, net | 41,382,223 | 39,833,280 |
Property and buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 42,066,001 | 28,336,864 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 4,210,500 | 4,041,418 |
Transportation vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 979,549 | 925,945 |
Office and electronic equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 893,680 | $ 833,105 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment, Net (Textual) | |||
Depreciation expense | $ 1,584,973 | $ 1,403,585 | $ 1,185,476 |
Plant construction expenditure description | The Company's properties with an aggregate carrying value of approximately $1.2 million (RMB 8.6 million) has been used as collateral for the Company's short-term loans. |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 7,737,669 | $ 8,179,365 |
Less: accumulated amortization | (896,156) | (777,815) |
Intangible assets, net | 6,841,513 | 7,401,550 |
Land use rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | 7,705,939 | 8,145,824 |
Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 31,730 | $ 33,541 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 160,222 | |
2020 | 160,222 | |
2021 | 160,222 | |
2022 | 160,222 | |
2023 and Thereafter | 6,200,676 | |
Estimated future amortization expense | $ 6,841,513 | $ 7,401,550 |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details Textual) | 12 Months Ended | |||
Dec. 31, 2018USD ($)m² | Dec. 31, 2017USD ($)m² | Dec. 31, 2016USD ($) | Dec. 31, 2015m² | |
Intangible Assets, Net (Textual) | ||||
Land use right | m² | 206,667 | |||
Amortization expense | $ | $ 166,850 | $ 163,154 | $ 175,784 | |
Short-term Debt [Member] | ||||
Intangible Assets, Net (Textual) | ||||
Land use right | m² | 26,695 | |||
Land, amount carrying value | $ | $ 400,000 | |||
Long-term Debt [Member] | ||||
Intangible Assets, Net (Textual) | ||||
Land use right | m² | 306,000 | 306,000 | ||
Land, amount carrying value | $ | $ 4,900,000 | $ 5,300,000 |
Short-term Loans (Details)
Short-term Loans (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Short-term Debt [Line Items] | |||
Total short-term loans | $ 8,858,457 | $ 7,540,381 | |
Deferred Financing Costs [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | (83,643) | (267,579) | |
China Merchants Bank [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [1] | 4,362,000 | 3,074,000 |
Beijing Bank [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [2] | 2,908,000 | 4,611,000 |
Bank Of Communications [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [3] | 1,454,000 | |
Haikong Holdings Microfinance Co Ltd [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [4] | 218,100 | |
Haikou United Bank [Member] | |||
Short-term Debt [Line Items] | |||
Total short-term loans | [5] | $ 122,960 | |
[1] | In June 2016, Beijing REIT, entered into a line of credit agreement with CMB to borrow an aggregate of approximately $2.9 million (RMB 20 million) as working capital for one year. The agreement was further renewed in 2017. These loans were fully repaid upon maturity during the year ended December 31, 2018. In May 2018, Beijing REIT entered into a new line of credit agreement with CMB. The agreement allows Beijing REIT to obtain loans up to approximately $4.4 million (RMB 30 million) for use as working capital between May 3, 2018 and May 2, 2020. Pursuant to the agreement, BEIT entered into six loan agreements between May and December, 2018 with CMB to borrow the full amount. These loans have a term of 12 months and bear fixed interest rates ranging from 5.655% to 6.960% per annum. All these loans are guaranteed by a third-party guaranty company and the Chairman and Chief Executive Officer of the Company. Gu'an REIT also pledged its property with a carrying value of approximately $1.0 million (RMB 7.2 million) and land use rights with a carrying value of approximately $0.4 million (RMB 3.1million) as collateral. | ||
[2] | In January, April, July and October 2017, Beijing REIT entered into a series loan agreement with BJB to borrow an aggregated of approximately $4.6 million (RMB 30 million) as working capital for a period of six months to one year with respective maturity dates. All these loans are either guaranteed by a third-party guaranty company and the principal shareholders of the Company. All the loans were repaid in full upon maturity during the year ended December 31, 2018. In February 2018, Beijing REIT entered into a new line of credit agreement with BJB. The agreement allows Beijing REIT to obtain loans up to approximately $2.9 million (RMB 20 million) as working capital. Pursuit to the agreement, BEIT entered into three loan agreements in February, March and April, 2018 with BJB to borrow the full amount. These loans have a term of 12 months and bear fixed interest rates ranging from 5.22% to 5.4475% per annum. All these loans are guaranteed by a third-party guaranty company and the CEO and principal shareholders of the Company. These loans were fully repaid upon maturity. | ||
[3] | In September 2018, Beijing REIT entered into a bank loan agreement with BOC to borrow approximately $1.5 million (RMB 10 million) as working capital for one year. The loan bears a fixed interest rate of 5.0025% per annum. The loan is also guaranteed by the principal shareholders of the Company. | ||
[4] | In December 2018, REIT Changjiang entered into a loan agreement with HHMC to borrow approximately $0.22 million (RMB 1.5 million) as working capital for one year. The loan bears a fixed interest rate of 19.2% per annum. REIT Changjiang pledged its property with a carrying value of approximately $0.2 million (RMB 1.4 million) as collateral. The loan is also guaranteed by the CEO and principal shareholders of the Company. | ||
[5] | In January 2017, REIT Changjiang entered into a bank loan agreement with HUB to borrow approximately $0.15 million (RMB 1 million) as working capital for one year. During the year ended December 31, 2017, the Company repaid approximately $0.03 million (RMB 200,000) and the remaining loan was repaid upon maturity during the year ended December 31, 2018. |
Short-term Loans (Details Textu
Short-term Loans (Details Textual) | 1 Months Ended | 12 Months Ended | ||||||||||||||||||||
May 31, 2018USD ($) | May 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2018CNY (¥) | Sep. 30, 2018USD ($) | Sep. 30, 2018CNY (¥) | May 31, 2018CNY (¥) | Feb. 28, 2018USD ($) | Feb. 28, 2018CNY (¥) | Oct. 31, 2017USD ($) | Oct. 31, 2017CNY (¥) | Jul. 31, 2017USD ($) | Jul. 31, 2017CNY (¥) | Apr. 30, 2017USD ($) | Apr. 30, 2017CNY (¥) | Jan. 31, 2017USD ($) | Jan. 31, 2017CNY (¥) | Jun. 30, 2016USD ($) | Jun. 30, 2016CNY (¥) | |
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | $ 8,858,457 | $ 7,540,381 | ||||||||||||||||||||
Interest expense on all short-term bank loans | 480,452 | $ 365,964 | $ 635,875 | |||||||||||||||||||
China Merchants Bank [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | $ 4,400,000 | $ 2,900,000 | ||||||||||||||||||||
Land use right | 400,000 | |||||||||||||||||||||
Property with carrying value of the collateral | $ 1,000,000 | |||||||||||||||||||||
China Merchants Bank [Member] | Minimum [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Effective interest rate, percentage | 5.655% | 5.655% | ||||||||||||||||||||
China Merchants Bank [Member] | Maximum [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Effective interest rate, percentage | 6.96% | 6.96% | ||||||||||||||||||||
China Merchants Bank [Member] | RMB [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | ¥ | ¥ 30,000,000 | ¥ 20,000,000 | ||||||||||||||||||||
Land use right | ¥ | ¥ 3,100,000 | |||||||||||||||||||||
Property with carrying value of the collateral | ¥ | ¥ 7,200,000 | |||||||||||||||||||||
Beijing Bank [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | $ 2,900,000 | $ 4,600,000 | $ 4,600,000 | $ 4,600,000 | $ 4,600,000 | |||||||||||||||||
Beijing Bank [Member] | Minimum [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Effective interest rate, percentage | 5.22% | 5.22% | ||||||||||||||||||||
Beijing Bank [Member] | Maximum [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Effective interest rate, percentage | 5.4475% | 5.4475% | ||||||||||||||||||||
Beijing Bank [Member] | RMB [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | ¥ | ¥ 20,000,000 | ¥ 30,000,000 | ¥ 30,000,000 | ¥ 30,000,000 | ¥ 30,000,000 | |||||||||||||||||
Bank of Communications [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | $ 1,500,000 | |||||||||||||||||||||
Effective interest rate, percentage | 5.0025% | 5.0025% | ||||||||||||||||||||
Bank of Communications [Member] | RMB [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | ¥ | ¥ 10,000,000 | |||||||||||||||||||||
Haikong Holdings Microfinance Co., Ltd [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | $ 220,000 | |||||||||||||||||||||
Effective interest rate, percentage | 19.20% | 19.20% | ||||||||||||||||||||
Property with carrying value of the collateral | $ 200,000 | |||||||||||||||||||||
Haikong Holdings Microfinance Co., Ltd [Member] | RMB [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | ¥ | ¥ 1,500,000 | |||||||||||||||||||||
Property with carrying value of the collateral | $ 1,400,000 | |||||||||||||||||||||
Haikou United Bank [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | $ 150,000 | |||||||||||||||||||||
Short term loan, description | The remaining loan was repaid upon maturity during the year ended December 31, 2018 | The remaining loan was repaid upon maturity during the year ended December 31, 2018 | ||||||||||||||||||||
Repaid debt outstanding | $ 30,000 | |||||||||||||||||||||
Haikou United Bank [Member] | RMB [Member] | ||||||||||||||||||||||
Short-Term Loans (Textual) | ||||||||||||||||||||||
Borrow an aggregate amount | ¥ | ¥ 1,000,000 | |||||||||||||||||||||
Repaid debt outstanding | ¥ | ¥ 200,000 |
Long Term Bank Loans (Details)
Long Term Bank Loans (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Subtotal | $ 8,578,600 | $ 7,411,564 | |
Less: current maturities of long-term loan | (436,200) | (4,460,524) | |
Long-term loan-noncurrent portion | 8,142,400 | 2,951,040 | |
Long-term bank loan - Industrial and Commercial Bank of China ("ICBC") [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Subtotal | [1] | 7,411,564 | |
Long-term bank loan - Changjiang Li Autonomous County Rural Credit Cooperative Association ("CCCA") [Member] | |||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Subtotal | [2] | $ 8,578,600 | |
[1] | In September 2013, REIT Changjiang entered into a line of credit agreement with ICBC, which allowed REIT Changjiang to borrow up to approximately $13.8 million (RMB 96 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. During the year ended December 31, 2017, the Company repaid approximately $3.1 million (RMB 20.7 million). The remaining balance of approximately $7.4 million (RMB 48.2 million) was repaid in full as of December 31, 2018. | ||
[2] | In June 2018, REIT Changjiang entered into a loan agreement with CCCA to borrow approximately $8.7 million (RMB $60 million) for expansion of its production facilities. The loan has a term of six years from June 19, 2018 to June 19, 2024 with a fixed interest rate of 7% per annum. REIT Changjiang has pledged its land use right of 306,000 square meters and construction in progress on this land, as well as certain production lines as collateral. RETO and Beijing REIT also pledged their shares in REIT Changjiang of 15.683% and 84.317%, respectively, as collateral to secure the loan. The loan is guaranteed by the CEO and principal shareholders of the Company. During the year ended December 31, 2018, the Company repaid approximately $0.1 million (RMB 1.0 million). |
Long Term Bank Loans (Details 1
Long Term Bank Loans (Details 1) - Dec. 31, 2018 | USD ($) | CNY (¥) |
June 19, 2019 | $ | $ 145,400 | |
December 19, 2019 | $ | 290,800 | |
June 19, 2020 | $ | 290,800 | |
December 19, 2020 | $ | 872,400 | |
June 19, 2021 | $ | 872,400 | |
December 19, 2021 | $ | 1,017,800 | |
June 19, 2022 | $ | 1,017,800 | |
December 19, 2022 | $ | 1,017,800 | |
June 19, 2023 | $ | 1,017,800 | |
December 19, 2023 | $ | 1,017,800 | |
June 19, 2024 | $ | 1,017,800 | |
Total | $ | $ 8,578,600 | |
RMB [Member] | ||
June 19, 2019 | ¥ | ¥ 1,000,000 | |
December 19, 2019 | ¥ | 2,000,000 | |
June 19, 2020 | ¥ | 2,000,000 | |
December 19, 2020 | ¥ | 6,000,000 | |
June 19, 2021 | ¥ | 6,000,000 | |
December 19, 2021 | ¥ | 7,000,000 | |
June 19, 2022 | ¥ | 7,000,000 | |
December 19, 2022 | ¥ | 7,000,000 | |
June 19, 2023 | ¥ | 7,000,000 | |
December 19, 2023 | ¥ | 7,000,000 | |
June 19, 2024 | ¥ | 7,000,000 | |
Total | ¥ | ¥ 59,000,000 |
Long Term Bank Loans (Details T
Long Term Bank Loans (Details Textual) | 1 Months Ended | 12 Months Ended | |||||
Jun. 30, 2018m² | Sep. 30, 2013USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2013CNY (¥) | |
Long Term Bank Loans (Textual) | |||||||
Total interest on long-term bank loans | $ 552,804 | $ 585,158 | $ 795,025 | ||||
RETO [Member] | |||||||
Long Term Bank Loans (Textual) | |||||||
Non-controlling equity interest percentage | 15.683% | ||||||
Beijing REIT [Member] | |||||||
Long Term Bank Loans (Textual) | |||||||
Non-controlling equity interest percentage | 84.317% | ||||||
REIT Changjiang [Member] | |||||||
Long Term Bank Loans (Textual) | |||||||
Line of credit facility, Maximum borrowing | $ 13,800,000 | ||||||
Long term debt, description | In June 2018, REIT Changjiang entered into a loan agreement with CCCA to borrow approximately $8.7 million (RMB $60 million) for expansion of its production facilities. The loan has a term of six years from June 19, 2018 to June 19, 2024 with a fixed interest rate of 7% 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. During the year ended December 31, 2017, the Company repaid approximately $3.1 million (RMB 20.7 million). The remaining balance of approximately $7.4 million (RMB 48.2 million) was repaid in full as of December 31, 2018. | |||||
Land use right square meters | m² | 306,000 | ||||||
Repayments of debt | $ 100,000 | ||||||
REIT Changjiang [Member] | RMB [Member] | |||||||
Long Term Bank Loans (Textual) | |||||||
Line of credit facility, Maximum borrowing | ¥ | ¥ 96,000,000 | ||||||
Repayments of debt | ¥ | ¥ 1,000,000 |
Taxes (Details)
Taxes (Details) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Income Tax Disclosure [Abstract] | ||||
China Statutory income tax rate | 25.00% | 25.00% | 25.00% | |
Effect of favorable income tax rate in certain entity in PRC | (1.40%) | (2.80%) | (3.00%) | |
Non-PRC entities not subject to PRC tax | [1] | 6.30% | 4.50% | 3.00% |
Research & Development ("R&D") tax credit | [2] | (1.10%) | (0.30%) | (0.50%) |
Non-deductible expenses-permanent difference | [3] | 0.20% | 0.00% | 1.10% |
Change in valuation allowance | (3.30%) | 2.90% | 4.60% | |
Effective tax rate | 25.70% | 29.30% | 30.20% | |
[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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Income before income tax expense from China | $ 7,705,629 | $ 11,136,874 | $ 7,252,723 |
Loss before income tax expense from outside of China | (1,557,492) | (1,730,009) | (797,287) |
Total | $ 6,148,137 | $ 9,406,865 | $ 6,455,436 |
Taxes (Details 2)
Taxes (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Current | $ 1,862,465 | $ 2,954,130 | $ 1,997,041 |
Deferred | (282,010) | (194,045) | (44,685) |
Total | $ 1,580,455 | $ 2,760,080 | $ 1,952,356 |
Taxes (Details 3)
Taxes (Details 3) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Provision of doubtful accounts | $ 551,534 | $ 296,535 |
Tax loss carried forwards | 2,031,165 | 1,729,036 |
Valuation allowance on tax losses | (2,031,165) | (1,729,036) |
Deferred tax assets, net | $ 551,534 | $ 296,535 |
Taxes (Details 4)
Taxes (Details 4) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
VAT tax payable | $ 97,267 | $ 191,284 |
Corporate income tax payable | 2,812,063 | 2,927,254 |
Land use tax and other taxes payable | 55,194 | 233,974 |
Total | $ 2,964,524 | $ 3,352,512 |
Taxes (Details Textual)
Taxes (Details Textual) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | 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 | $ 86,898 | $ 266,125 | $ 196,303 | |
Per share effect of the tax exemption | $ 0.004 | $ 0.01 | $ 0.01 | |
Deferred tax assets | $ 551,534 | $ 296,535 | ||
Increases in valuation allowance | $ 302,129 | $ 283,160 | ||
VAT rate | 17.00% | |||
Percentage of taxable income | 10.00% | 10.00% | ||
R&D expense approved by local tax authority deducted from tax income | 150.00% | |||
Beijing REIT [Member] | ||||
Taxes (Textual) | ||||
Favorable income tax rate | 15.00% |
Commitments and Contigencies (D
Commitments and Contigencies (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 246,684 |
2020 | 223,735 |
2021 | 230,926 |
Total | $ 701,345 |
Commitments and Contigencies _2
Commitments and Contigencies (Details Textual) | 12 Months Ended | |||||||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018CNY (¥) | Dec. 07, 2018 | Nov. 08, 2018 | Dec. 31, 2015m² | Jul. 15, 2015 | |
Commitments (Textual) | ||||||||
Operating lease expense amount | $ 233,921 | $ 89,785 | $ 196,330 | |||||
Equity Method Investment, Ownership Percentage | 14.00% | |||||||
Area of land | m² | 206,667 | |||||||
Obtained financing in an amount | $ 870,000 | |||||||
Reit Xinyi [Member] | ||||||||
Commitments (Textual) | ||||||||
Equity Method Investment, Ownership Percentage | 51.00% | 30.00% | 70.00% | |||||
RMB [Member] | ||||||||
Commitments (Textual) | ||||||||
Obtained financing in an amount | ¥ | ¥ 6,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||
Total | $ 561,313 | $ 375,697 | |
Mr. Hengfang Li [Member] | |||
Related Party Transaction [Line Items] | |||
Total | [1] | $ 561,313 | $ 375,697 |
[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 (D_2
Related Party Transactions (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||
Accounts receivable | $ (450,473) | ||
Reto International Trading Co. Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Accounts receivable | [1] | 450,473 | |
Shexian Ruibo Environmental Science and Technology Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Advance to supplier | [2] | 947,557 | |
Q Green Techcon Private Limited [Member] | |||
Related Party Transaction [Line Items] | |||
Accounts payable | [3] | $ 557,584 | |
[1] | Reto International Trading Co. Ltd. ("Reto International Trading") is a related party due to the sole shareholder of Reto International Trading is a greater than 5% shareholder of RETO. | ||
[2] | Shexian Ruibo is a related party because the majority shareholder of Shexian Ruibo was a greater than 5% shareholder of RETO in 2018. | ||
[3] | Q Green Techcon Private Limited is the minority Shareholder of REIT India and holds 49% of REIT India's equity. |
Related Party Transactions (D_3
Related Party Transactions (Details 2) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Related Party Transaction [Line Items] | ||||
Sales to related parties | $ 1,940,811 | |||
Purchase from a relate party | 5,843,564 | |||
Zhongrong Honghe Eco Construction Materials Co., Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales to related parties | [1] | 567,812 | ||
Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales to related parties | [2] | 233,559 | ||
Reto International Trading Co. Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales to related parties | 1,139,440 | |||
Shexian Ruibo Environmental Science and Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Purchase from a relate party | $ 5,843,564 | |||
[1] | Zhongrong Honghe Eco Construction Materials Co., Ltd. is an entity controlled by the CEO's wife. | |||
[2] | Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. is an entity controlled by the CEO's wife. |
Related Party Transactions (D_4
Related Party Transactions (Details Textual) | Dec. 31, 2018 | Nov. 08, 2018USD ($) | Nov. 08, 2018CNY (¥) | Mar. 17, 2017USD ($) | Mar. 17, 2017CNY (¥) |
Related Party Transactions (Textual) | |||||
Percentage of interest rate of related party | 14.00% | 14.00% | |||
Guaranteed principal creditors amount | $ | $ 3,842,500 | ||||
Individual investor borrowed | $ | $ 870,000 | ||||
Reto International Trading Co. Ltd. [Member] | |||||
Related Party Transactions (Textual) | |||||
Percentage of interest rate of related party | 5.00% | ||||
Shexian Ruibo Environmental Science and Technology Co., Ltd. [Member] | |||||
Related Party Transactions (Textual) | |||||
Percentage of interest rate of related party | 5.00% | ||||
Q Green Techcon Private Limited [Member] | |||||
Related Party Transactions (Textual) | |||||
Percentage of interest rate of related party | 49.00% | ||||
RMB [Member] | |||||
Related Party Transactions (Textual) | |||||
Guaranteed principal creditors amount | ¥ | ¥ 25,000,000 | ||||
Individual investor borrowed | ¥ | ¥ 6,000,000 |
Equity (Details)
Equity (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Equity [Abstract] | ||||
Beginning balance | $ 2,307,727 | $ 5,012,260 | ||
Proportionate share of net income | 87,064 | 668,396 | $ 399,559 | |
Acquisition of noncontrolling interests in REIT Changjiang | [1] | (3,970,350) | ||
Foreign currency translation adjustment | (126,806) | 597,421 | ||
Ending balance | $ 2,267,985 | $ 2,307,727 | $ 5,012,260 | |
[1] | 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 $3.3 million. The transaction was completed as of December 31, 2017. As a result, REIT Changjiang is now a wholly owned subsidiary of the Company. |
Equity (Details Textual)
Equity (Details Textual) | 1 Months Ended | 12 Months Ended | ||||||||||
Nov. 29, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2016CNY (¥)shares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥) | Nov. 08, 2018 | Jan. 10, 2016 | Nov. 22, 2011 | |
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. | |||||||||||
Restricted amounts | $ 2,632,797 | $ 1,989,475 | ||||||||||
Common shares of value issued | 14,270,194 | |||||||||||
Cash proceeds | $ 4,457,500 | |||||||||||
Payments to original shareholders of Beijing REIT | 3,466,260 | |||||||||||
Initial public offering shares of common stock | $ 16,100,000 | |||||||||||
Equity interest, percentage | 14.00% | |||||||||||
REIT Changjiang [Member] | ||||||||||||
Equity (Textual) | ||||||||||||
Equity interest, percentage | 84.32% | |||||||||||
Majority shareholders of interest rate | 15.68% | |||||||||||
Non-controlling equity interest value | $ 3,300,000 | |||||||||||
REIT Changjiang [Member] | ||||||||||||
Equity (Textual) | ||||||||||||
Ownership interest | 84.32% | |||||||||||
Reit Holdings [Member] | ||||||||||||
Equity (Textual) | ||||||||||||
Majority shareholders of interest rate | 15.68% | |||||||||||
Deposit made to Venture Business International | $ 565,000 | |||||||||||
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 | |||||||||||
RMB [Member] | ||||||||||||
Equity (Textual) | ||||||||||||
Payments to original shareholders of Beijing REIT | ¥ | ¥ 24,000,000 | |||||||||||
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 | |||||||||||
Unrelated Third Party [Member] | RMB [Member] | ||||||||||||
Equity (Textual) | ||||||||||||
Common stock to settle a loan payable, amount | ¥ | ¥ 21,240,000 | |||||||||||
Unrelated Investor [Member] | ||||||||||||
Equity (Textual) | ||||||||||||
Common shares issued | shares | 900,000 | 900,000 | ||||||||||
Common shares of value issued | $ 3,600,000 | |||||||||||
Common share price | $ / shares | $ 4 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 37,569,862 | $ 35,551,016 | $ 32,424,269 |
Cost of goods sold | 20,368,339 | 17,697,286 | 18,371,228 |
Gross profit | 17,201,523 | 17,853,730 | 14,053,041 |
Interest expense and charges | 1,065,287 | 1,012,960 | 1,450,389 |
Depreciation and amortization | 1,734,255 | 1,566,739 | 1,361,260 |
Capital expenditures | 9,275,685 | 4,639,003 | 9,372,067 |
Income tax expenses | 1,580,455 | 2,760,080 | 1,952,356 |
Segment profit (loss) | 4,567,682 | 6,646,785 | 4,503,080 |
Segment assets | 82,004,922 | 81,131,829 | 62,660,999 |
Machinery and Equipment sales [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 17,453,324 | 14,484,853 | 13,166,604 |
Cost of goods sold | 8,050,742 | 6,735,906 | 5,456,102 |
Gross profit | 9,402,582 | 7,748,947 | 7,710,502 |
Interest expense and charges | 478,515 | 410,214 | 650,727 |
Depreciation and amortization | 212,819 | 207,651 | 189,404 |
Capital expenditures | 242,077 | 107,577 | 87,267 |
Income tax expenses | 294,283 | 1,030,904 | 945,186 |
Segment profit (loss) | 2,687,222 | 3,335,076 | 3,125,268 |
Segment assets | 21,156,682 | 10,899,522 | 12,870,817 |
Construction materials sales [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 18,805,539 | 19,455,800 | 18,424,613 |
Cost of goods sold | 11,600,016 | 10,368,972 | 12,400,372 |
Gross profit | 7,205,523 | 9,086,828 | 6,024,241 |
Interest expense and charges | 583,123 | 601,141 | 795,833 |
Depreciation and amortization | 1,508,016 | 1,359,088 | 1,170,605 |
Capital expenditures | 9,033,608 | 4,500,485 | 9,284,800 |
Income tax expenses | 1,283,697 | 1,486,371 | 967,221 |
Segment profit (loss) | 3,613,721 | 4,395,629 | 2,830,950 |
Segment assets | 59,083,126 | 60,000,714 | 47,829,971 |
Municipal construction projects [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 720,191 | 250,422 | |
Cost of goods sold | 537,076 | 160,324 | |
Gross profit | 183,115 | 90,098 | |
Interest expense and charges | 329 | 370 | 282 |
Depreciation and amortization | 13,420 | 1,251 | |
Capital expenditures | 30,941 | ||
Income tax expenses | 1,675 | ||
Segment profit (loss) | (68,077) | (82,323) | (901,145) |
Segment assets | 716,909 | 567,030 | (186,139) |
Technological consulting and other services [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 590,808 | 1,359,941 | 833,052 |
Cost of goods sold | 180,505 | 432,084 | 514,754 |
Gross profit | 410,303 | 927,857 | 318,298 |
Interest expense and charges | 3,320 | 1,235 | 3,547 |
Depreciation and amortization | |||
Capital expenditures | |||
Income tax expenses | 800 | 242,805 | 39,949 |
Segment profit (loss) | (1,665,184) | (1,001,597) | (551,993) |
Segment assets | $ 893,878 | $ 9,664,563 | $ 2,146,350 |
Subsequent Events (Details)
Subsequent Events (Details) | Jan. 11, 2019$ / sharesshares | Apr. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2019CNY (¥) | Feb. 28, 2019USD ($) | Jan. 31, 2019USD ($) | Jan. 31, 2019CNY (¥) | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares |
Subsequent Events (Textual) | |||||||||
Borrow an aggregate amount | $ | $ 8,858,457 | $ 7,540,381 | |||||||
Common stock authorized | shares | 200,000,000 | 200,000,000 | |||||||
Subsequent Event [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Common shares issued | shares | 2,000,000 | ||||||||
Subsequent Event [Member] | Short-term Debt [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Borrow an aggregate amount | $ | $ 2,200,000 | $ 2,200,000 | $ 2,200,000 | ||||||
Subsequent Event [Member] | Short-term Debt [Member] | RMB [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Borrow an aggregate amount | ¥ | ¥ 15,000,000 | ||||||||
Subsequent Event [Member] | Long-term Debt [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Borrow an aggregate amount | $ | $ 727,000 | ||||||||
Subsequent Event [Member] | Long-term Debt [Member] | RMB [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Borrow an aggregate amount | ¥ | ¥ 5,000,000 | ||||||||
Subsequent Event [Member] | 2018 Share Incentive Plan [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Common stock authorized | shares | 2,000,000 | ||||||||
Common share price | $ / shares | $ 0.001 |