Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 22, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | TGS International Ltd. | ||
Entity Central Index Key | 0001701859 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Common Stock, Shares Outstanding | 14,345,000 | ||
Entity Public Float | $ 0 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 98,121 | $ 38,943 |
Other receivables | 68,963 | 91,072 |
Prepayments and deposits | 141,522 | 149,182 |
Total current asset | 308,606 | 279,197 |
Non-current assets | ||
Property, plant and equipment | 1,557,622 | 1,639,139 |
Intangible assets | 1,097,362 | 1,097,362 |
Total Assets | 2,963,590 | 3,015,698 |
Current liabilities | ||
Accrued charges | 301,413 | 307,663 |
Other payables | 237,167 | 234,385 |
Amount due to a director | 73,560 | |
Loans from related persons | 766,246 | 256,022 |
Total current liabilities | 1,378,386 | 798,070 |
Non-current liabilities | ||
Amounts due to shareholders | 398,208 | 8,679,987 |
Provision for asset retirement obligations | 31,383 | 30,696 |
Provision for exploration asset compensation | 102,127 | 111,239 |
Total Liabilities | 1,910,104 | 9,619,992 |
Commitments | ||
Stockholders' equity/(deficiency) | ||
Capital Stock Authorized 200,000,000 common stock, voting, par value $0.0001 each; 14,165,000 common shares issued and outstanding (December 31, 2017 - 791) | 1,417 | 791 |
Authorized 100,000,000 preferred stock, non-voting, par value $0.0001 each | ||
Additional paid in capital | 8,937,243 | (691) |
Accumulated loss | (7,617,451) | (6,375,999) |
Accumulated other comprehensive loss | (267,723) | (228,395) |
Total stockholders' equity/(deficiency) | 1,053,486 | (6,604,294) |
Total liabilities and stockholders' equity/(deficiency) | $ 2,963,590 | $ 3,015,698 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Stockholders' equity/(deficiency) | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, issued | 14,165,000 | 14,165,000 |
Common stock, outstanding | 14,165,000 | 14,165,000 |
Preferred stock, authorized | 100,000,000 | 100,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements Of Loss And Comprehensive Loss | ||
Net sales | $ 667,804 | $ 295,262 |
Cost of sales | (516,961) | (474,434) |
Gross profit/(loss) | 150,843 | (179,172) |
Administrative expenses | (1,342,830) | (800,863) |
Loss from operations | (1,191,987) | (980,035) |
Other income | 34,083 | 36 |
Interest expense | (83,548) | (250,970) |
Loss before provision for income taxes | (1,241,452) | (1,230,969) |
Income taxes | ||
Net loss | (1,241,452) | (1,230,969) |
Other comprehensive (loss)/income, net of tax: | ||
Foreign currency translation adjustments | (39,328) | 135,385 |
Comprehensive loss | $ (1,280,780) | $ (1,095,584) |
Net loss per share: | ||
Basic and Diluted net loss per share | $ (0.26) | $ (1,556.25) |
Weighted average number of common shares outstanding: Basic and diluted | 4,736,382 | 791 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders Equity - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated losses | Accumulated other comprehensive loss | Total |
Beginning balance, shares at Dec. 31, 2016 | 791 | ||||
Beginning balance, amount at Dec. 31, 2016 | $ 791 | $ (691) | $ (5,145,030) | $ (363,780) | $ (5,508,710) |
Net loss | (1,230,969) | (1,230,969) | |||
Foreign currency translation adjustments | 135,385 | 135,385 | |||
Ending balance, shares at Dec. 31, 2017 | 791 | ||||
Ending balance, amount at Dec. 31, 2017 | $ 791 | (691) | (6,375,999) | (228,395) | (6,604,294) |
Issuance of common stock, shares | 6,999,209 | ||||
Issuance of common stock, amount | $ 6,999,209 | 1,849,501 | 8,848,710 | ||
Adjustment due to the reverse merger, shares | 7,030,000 | ||||
Adjustment due to the reverse merger, amount | $ (6,998,597) | 6,998,597 | |||
Cancellation of shares, shares | (30,000) | ||||
Cancellation of shares, amount | $ (3) | $ 3 | |||
Proceeds from issuance of shares and warrants, shares | 165,000 | ||||
Proceeds from issuance of shares and warrants, amount | $ 17 | $ 89,833 | $ 89,850 | ||
Net loss | (1,241,452) | (1,241,452) | |||
Foreign currency translation adjustments | (39,328) | (39,328) | |||
Ending balance, shares at Dec. 31, 2018 | 14,165,000 | ||||
Ending balance, amount at Dec. 31, 2018 | $ 1,417 | $ 8,937,243 | $ (7,617,451) | $ (267,723) | $ 1,053,486 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (1,241,452) | $ (1,230,969) |
Adjustments to reconcile net loss to net cash used in operating activities:- | ||
Depreciation of property, plant and equipment | 52,149 | 101,792 |
Loss on disposal of property, plant and equipment | 1,018 | 8,456 |
Net foreign exchange losses | 30,369 | 18,332 |
Stock compensation expenses | 37,350 | |
Waiver of consultancy fee | (5,311) | |
Written off of deposit paid | 10,856 | |
Over-provision of prior year service fee | (28,661) | |
Changes in assets and liabilities:- | ||
Inventories | 90,295 | |
Accounts receivable | 49,588 | |
Other receivables | 5,551 | 1,514 |
Prepayments and deposits | 6,874 | 14,565 |
Accrued charges | 96,881 | (77,544) |
Other payables | 142,889 | 118,758 |
Provision for asset retirement obligations | 3,408 | 3,037 |
Provision for exploration asset compensation | 10,991 | |
Net cash used in operating activities | (888,079) | (891,185) |
Cash flows from investing activities | ||
Proceeds from the sale of property plant and equipment | 4,026 | |
Acquisition of property, plant and equipment | (42,405) | (35,373) |
Net cash used in investing activities | (38,379) | (35,373) |
Cash flows from financing activities | ||
Advances from shareholders | 478,958 | 1,483,608 |
Repayment of loans | (644,759) | |
Proceed from new loan – related person | 510,354 | |
Net cash provided by financing activities | 989,312 | 838,849 |
Net increase/(decrease) in cash and cash equivalents | 62,854 | (87,709) |
Effect of exchange rate changes on cash and cash equivalents | (3,676) | 25,374 |
Cash and cash equivalents, beginning of year | 38,943 | 101,278 |
Cash and cash equivalents, end of year | 98,121 | 38,943 |
Supplemental disclosures:- | ||
Interest paid | 37,851 | 269,400 |
Income tax paid | ||
Noncash investing and financing transactions:- | ||
Cancellation of shares | 3 | |
Capitalization of advances from shareholder | 8,848,710 | |
Stock compensation expenses | $ 37,350 |
NATURE OF OPERATIONS AND GOING
NATURE OF OPERATIONS AND GOING CONCERN | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN | TGS International Ltd. (“TGS”, “the Company”) was incorporated in the state of Nevada, United States on December 1, 2016. On September 14, 2018, the Company entered into a Share Exchange Agreement with Arcus Mining Holdings Limited (“Arcus”) and Chi Kin Loo, Billion Plus Limited, First Fortune Investment Limited, Great Win Limited and Master Value Holdings Limited (the “Selling Stockholders”), pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. Arcus, which was incorporated in the Republic of Seychelles on June 17, 2014, and its subsidiaries are engaged in fluorite mining operations in Mongolia, including the processing and sales of fluorite products. Up to December 31, 2018 and the date of this report, the Company owns three mining rights in Mongolia (Mining license numbers: MV-016819, MV-017305 and MV-009918). During the year ended December 31, 2018, the Company did not commence regular mining operations except a trial production which was conducted in Mine B located in Bayan-Ovoo soum, Khenti province (Mining license number: MV-016819). Reverse merger On September 14, 2018, the Company and Arcus entered into a Share Exchange Agreement, dated September 14, 2018 with the Selling Stockholders, pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. The merger closed on September 14, 2018 and resulted in the following: Immediately prior to the Share Exchange, 6,500,000 shares of our outstanding common stock were cancelled and retired. A further 30,000 shares were canceled after the Share Exchange. As a result of the transactions described above, the Company became the record and beneficial owner of 100% of the share capital of Arcus and therefore owns 100% of the share capital of its subsidiaries. As a result of the Share Exchange, the cancellation of 6,530,000 shares and the issuance of 7,000,000 shares, the Company has 14,000,000 shares of common stock issued and outstanding on September 14, 2018. The transaction is accounted for as a “reverse acquisition”, with Arcus being treated as the accounting acquirer for financial reporting purposes. The historical consolidated financial statements include the operations of the accounting acquirer and its subsidiaries for all periods presented. Change in Fiscal Year On September 14, 2018, the Company changed its fiscal year end from February 28 to December 31. The change of the fiscal year end was approved by the Board of Directors. Going Concern The Company incurred an operating loss of $1,241,452 for the year ended December 31, 2018, and as of that date, the Company’s current liabilities exceeded its current assets by $1,069,780. Notwithstanding the operating loss incurred for the year ended December 31, 2018 and has net current liabilities as of December 31, 2018, the accompanying consolidated financial statements have been prepared on a going concern basis. Since the Company is currently in the development and trial-production stage, it is still in the capital investing period. Management has prepared a business cash flow forecast and it indicates that the Company will have positive cash inflow after the commencement of formal production. Management believes the Company will have sufficient working capital to meet its financing requirements based on the financial support of certain shareholders and upon their experience and their assessment of the Company’s projected performance, production ability and product market. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Principles of consolidation These consolidated financial statements include the accounts of the Company, TGS, and all of the wholly owned subsidiaries of TGS. All intercompany balances have been eliminated in consolidation. Use of estimates in the preparation of consolidated financial statements The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. By their nature, these estimates and assumptions are subject to measurement uncertainty and the effect on the consolidated financial statements of changes in such estimates and assumptions in future periods could be significant. Significant areas requiring management’s estimates and assumptions include valuation and impairment losses on mining rights and valuation of asset retirement obligations and exploration asset compensation. Other areas requiring estimates include depletion and amortization of mining rights, depreciation of property, plant and equipment and valuation allowance for deferred tax assets and deferred tax liabilities. Actual results could differ significantly from those estimates and assumptions. Concentration and credit risks Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. All of the Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk. The Company operates principally in the People’s Republic of China (“PRC”) (including Hong Kong) and Mongolia and grants credit to its customers in these geographic regions. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations. As of December 31, 2018 and 2017, the Company had credit risk exposure of uninsured cash and deposits with maturities of less than one year in banks of $116,744 and $33,823, respectively. The net sales to customers representing at least 10% of net total sales are as follows: Year ended December 31, 2018 (In United States dollars) % Customer D 261,159 39 Customer E 393,566 59 654,725 98 Year ended December 31, 2017 (In United States dollars) % Customer A 133,010 45 Customer B 66,662 23 Customer C 59,059 20 258,731 88 Cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less. As of December 31, 2018 and 2017, the Company’s cash amounted to $98,121 and $38,943, respectively, and there were no cash equivalents. Intangible assets Intangible assets consist of acquired mining rights and are initially measured at fair value as at the date of acquisition. Following the initial recognition, intangible assets are stated at cost less accumulated amortization and impairment losses. Intangible assets are amortized on the units-of-production method utilizing only proven and probable fluorite reserves in the depletion base. Property, plant and equipment (i) Property, plant and equipment are stated at cost less accumulated depreciation. Buildings are depreciated on a straight-line basis over 15 to 40 years, representing the shorter of the remaining term of the lease or the expected useful life to the Company. (ii) Other categories of property, plant and equipment are recorded at cost and depreciated to their estimated residual values using the straight-line method over their estimated useful lives, as follows: · Leasehold improvements: 5 years or the shorter of the remaining term of the lease · Furniture and equipment: 5 years · Motor vehicles: 3 to 7 years · Factory equipment: 5 to 10 years · Mineral properties: Unit-of-production (iii) Normal repairs and maintenance are charged to operating expenses as incurred, while costs incurred that extend the useful life of an asset, improve the safety of our operations, or improve operating efficiency are capitalized. Impairment of long-lived assets The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets. An impairment loss is measured and recorded based on discounted estimated future cash flows or upon an estimate of fair value that may be received in an exchange transaction. Future cash flows are estimated based on quantities of recoverable minerals, expected fluorspar prices, production levels and operating costs of production and capital, based upon the projected remaining future fluorspar production from each mining site. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of fluorspar that will be obtained after taking into account losses during processing and treatment. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, fluorspar prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties. As of December 31, 2018 and 2017, there were no impairment of long-lived assets. Income taxes Deferred income taxes are provided using the asset and liability method in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 740, “Income Taxes”. Under this method, deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as a non-current asset or liability. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax assets will not be realized. FASB ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides accounting guidance on de-recognition, classification, interest and penalties, accounting in years, disclosure and transition. Interest and penalties from tax assessments, if any, are included in income taxes in the statements of operations and comprehensive income. A tax position must be more likely than not of being sustained in order to be recognized in the consolidated financial statements. As of December 31, 2018 and 2017, the Company did not have any uncertain tax positions or accrued interest and penalties related to uncertain tax positions. The Company does not expect to have a material change to its income tax provisions in the next year. Operating lease charges Where the Company has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal installments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognized in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to income in the accounting period in which they are incurred. Restoration and remediation costs (Asset retirement obligations) In Mongolia, the mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the pre-existing mine area average quality after completion of the mining activities. Future reclamation and remediation costs, which include extraction equipment removal and environmental remediation, are accrued at the end of each period based on management’s best estimate of the costs expected to be incurred for each project. Such estimates consider the costs of future surface and groundwater activities, current regulations, actual expenses incurred, and technology and industry standards. In accordance with FASB ASC 410, “Asset Retirement and Environmental Obligations”, the Company capitalizes the measured fair value of asset retirement obligations to mineral properties. The asset retirement obligations are accreted to an undiscounted value until the time at which they are expected to be settled. The accretion expense is charged to earnings and the actual retirement costs are recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement. On a regular basis, the Company reviews the assumptions used to estimate the expected cash flows required to settle the asset retirement obligations, including changes in estimated probabilities, amounts and timing of the settlement of the asset retirement obligations, as well as changes in any regulatory or legal obligations for each of its mineral projects. Changes in any one or more of these assumptions may cause revision of asset retirement obligations for the corresponding assets. Revenue recognition On January 1, 2018, the Company adopted FASB ASC 606, “Revenue from Contracts with Customers”, applying the modified retrospective method. The adoption did not result in a material adjustment to the accumulated deficit as of January 1, 2018. The Company recognizes revenue in accordance with ASC 606 when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company has two kinds of revenue, sales of fluorite and commission income. The Company recognizes revenue when it satisfies a performance obligation in accordance with the provisions of a customer order or contract. This is achieved when control of the product has been transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product. In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The sales of the Company’s products to its customers represent a single performance obligation for which revenue is recognized at a point in time. Based on the foregoing, no significant judgment is required to determine when control of a product has been transferred to a customer. When another party is involved in providing goods or services to a customer, the Company must determine whether the obligation is to provide the specified good or service itself (i.e., the Company is the principal in the transaction) or to arrange for that good or service to be provided by the other party (i.e., the Company is an agent in the transaction). When the Company is responsible for satisfying a performance obligation, based on the ability to control the product or service provided, the Company is considered as a principal and revenue is recognized for the gross amount of consideration. When the other party is primarily responsible for satisfying a performance obligation, the Company is considered as an agent and revenue is recognized in the amount of any fee or commission to which the Company is entitled. The Company purchase minerals from suppliers and receive payments from the customers on selling certain goods. The Company has been determined as an agent for the ultimate customers in these transactions and the revenue is recorded net of the related fulfillment costs as commission income. The Company measures revenue based on the consideration it expects to be entitled to receive in exchange for its products. The standard terms and conditions of customer orders and contracts does not provide its customers with the right of return (except for quality), price protection, rebates or discounts. All sales are based on firm customer orders with fixed terms and conditions, which generally cannot be modified. See footnote 10 regarding the Company's revenue disaggregated by reporting segment. Provision for exploration asset compensation The Government of Mongolia issued a policy that requires all mining companies to pay compensation to the Government if the exploration work on their mining license area was funded by the Government. The compensation amount for the exploration work done has been estimated by the Mineral Resources Authority of Mongolia. The provision for exploration expenditure is calculated as the discounted net present value of estimated future net cash outflows of the reclamation and closure costs. Cost of sales Cost of sales includes raw material costs, mining overhead including depreciation expenses and shipping and handling costs related to the movement of finished goods from mining locations to customer locations. Additionally, cost of sales includes customs duties, product packaging cost, the cost of tooling and inventory shrinkage and damages. Administrative expenses Administrative expenses include salaries and benefits, consulting, audit, tax, legal, insurance, rent and utilities, and other general operating expenses. Shipping and Handling Costs Shipping and handling costs are classified as cost of product sales and processing and are expensed as incurred. Foreign currency transactions and translations These consolidated financial statements are presented in United States dollars (“USD”), which is different from TGS subsidiaries’ functional currencies. The functional currency of the subsidiaries in Mongolia, Khan Shashir LLC and Shek Hung Gold LLC, is the Mongolian Tugrik (“MNT”). The functional currency of the subsidiary in the People’s Republic of China (“PRC”), Best Metro Import & Export Trading (Inner Mongolia) Limited is the Chinese Renminbi (“RMB”), while the functional currency of all other subsidiaries is the Hong Kong dollar (“HKD”). The functional currency of TGS is the USD. The financial statements of foreign subsidiaries where HKD, MNT and RMB are the functional currencies and which have transactions denominated in non-HKD/MNT/RMB currencies are translated into HKD/MNT/RMB at the exchange rates existing on that date. The translation of local currencies into HKD/MNT/RMB creates transaction adjustments which are included in the statements of operations and comprehensive income. The financial statements of TGS’s foreign subsidiaries, where non-USD currencies are the functional currencies, are translated into USD using exchange rates in effect at period end for assets and liabilities and average exchange rates during each reporting period for the statement of operations. Adjustments resulting from translation of these financial statements are reflected as a separate component of stockholders’ deficit. Comprehensive loss Comprehensive loss is defined as all changes in equity/(deficit), exclusive of transactions with stockholders, such as capital investments. Comprehensive loss includes net loss and changes in certain assets and liabilities that are reported directly in equity. Basic and Diluted Loss per Share The Company computes loss per share in accordance with FASB ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding common shares during the period. Dilutive loss per share excludes all common stock equivalents if their effect is anti-dilutive. As of December 31, 2018, the Company had warrants outstanding which could potentially dilute basic loss per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive due to the net losses. Fair value measurement The Company complies with FASB ASC 820, “Fair Value Measurements”, which clarifies the definition of fair value, prescribes methods for measuring fair value and establishes a fair value hierarchy to classify the inputs used in measuring fair value. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:- Level 1 Level 2 Level 3 Financial instruments are measured as follows:- The carrying amounts of cash and cash equivalents, other receivables, deposits, accrued charges, other payables, loans from related persons and amounts due to shareholders, approximate their fair values due to the short term nature of these instruments. Warrants ASC 815-40, “Contracts in Entity’s Own Equity”, requires freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability. Under the provisions of ASC 815-40, a contract designated as an asset or a liability must be carried at fair value on a company’s balance sheet, with any changes in fair value recorded in the Company’s results of operations. A contract designated as an equity instrument must be included within equity, and no fair value adjustments are required from period to period. Recent changes in accounting standards Recently Adopted during the year In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as “ASC 606”). ASC 606 establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this guidance effective January 1, 2018 using the modified retrospective approach, and it did not materially effect the Company’s consolidated financial statements. The Company determined that adoption of the ASU did not have a significant impact on the Company’s sales. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance has no material impact on the consolidated financial statements of the Company. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Income Tax Accounting Implications of the Tax Cuts and Jobs Act. This Update states that the Tax Cuts and Jobs Act (the “Act”) changes existing United States tax law and includes numerous provisions that will affect businesses. The Act, for instance, introduces changes that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits. The Act has international tax consequences for many companies that operate internationally. This Update addresses the recognition of taxes payable or refundable for the current year and the recognition of deferred tax liabilities and deferred tax assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. For the Company, this Update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. The adoption of ASU 2018-05 did not a material impact on the consolidated financial statements of the Company. Pending Adoption as at year end In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. In November 2018, FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, which amends the scope and transition requirements of ASU 2016-13. Topic 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Topic 326 will become effective for the Company beginning January 1, 2020, with early adoption permitted, on a modified retrospective approach. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. This Update states a private company (reporting entity) may elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. This Update also states indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For the Company, this Update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. All entities are required to apply the amendments in this Update retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. Early adoption is permitted. The adoption of ASU 2018-17 is not expected to have a material impact on the Company’s consolidated financial statements in 2019. The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT | Property, plant and equipment include the following:- December 31, 2018 December 31, 2017 (In United States dollars) Buildings 164,223 178,876 Leasehold improvements 119,887 120,172 Furniture, fixture and equipment 176,883 126,086 Motor vehicles 245,217 281,691 Factory equipment 23,936 26,072 Mineral properties 1,276,766 1,346,814 Less: accumulated depreciation (481,672 ) (475,843 ) 1,525,240 1,603,868 Construction in progress 32,382 35,271 Total property, plant and equipment 1,557,622 1,639,139 Construction in progress is mainly related to a fluorspar beneficiation plant under construction and stall cables to be used during the construction of the shaft at the mine sites. During the years ended December 31, 2018 and 2017, depreciation expenses charged to the consolidated statements of operations amounted to $52,149 ($23,947 to administrative expenses and $28,202 to cost of sales) and $101,792 ($66,514 to administrative expenses and $35,278 to cost of sales), respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 4 - INTANGIBLE ASSETS | Intangible assets consist of acquired mining rights. As of December 31, 2018 and 2017, the Company owned three mining rights in Mongolia. (In United States dollars) Cost At December 31, 2018 and 2017 1,097,362 Accumulated amortization and impairment loss At December 31, 2018 and 2017 - Net book value At December 31, 2018 1,097,362 At December 31, 2017 1,097,362 As of December 31, 2018, future minimum amortization expenses in respect of intangible assets are as follows: Year ending December 31, (In United States dollars) 2019 8,908 2020 53,425 2021 120,202 2022 120,202 2023 120,202 Thereafter 674,423 1,097,362 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 5 - INCOME TAXES | The Company is subject to tax on an entity basis on income arising in or derived from the United States of America, Republic of Seychelles, Mongolia, PRC and Hong Kong. United States Tax The federal income tax rate in United States is 21%. The Company is subject to income taxes in the United States of America for each of the years ended December 31, 2018 and 2017. Seychelles Tax The statutory tax rate in the Republic of Seychelles is 25% on the first 1 million Seychelles Rupee of taxable income and 33% on the remainder. The Company is subject to income taxes in the Republic of Seychelles for each of the years ended December 31, 2018 and 2017. Hong Kong Tax BMHK, AHK and CAHK are subject to Hong Kong profits tax at the rate of 16.5% on the assessable profits. No provision for Hong Kong profits tax has been made as these companies incurred a loss for each of the years ended December 31, 2018 and 2017. Mongolia Corporate Income Tax KSS and SHG are registered and operate in Mongolia and are subject to Mongolia Corporate Income Tax at the rate of 10% on taxable income below MNT3 billion, or MNT300 million plus 25% on taxable income exceeding MNT3 billion. No provision for Mongolia corporate income tax has been made as these companies incurred a loss for each of the years ended December 31, 2018 and 2017. PRC Enterprise Income Tax BMIM is subject to PRC Enterprise Income Tax at the statutory rate of 25%. No provision for PRC Enterprise Income Tax has been made as this company incurred a loss for each of the years ended December 31, 2018 and 2017. The Company’s deferred tax assets and liabilities as of December 31, 2018 and 2017 are attributable to the following: As of December 31, 2018 December 31, 2017 (In United States dollars) Tax loss carry forwards 287,735 212,789 Less: Valuation allowance (287,735 ) (212,789 ) - - Changes in valuation allowance are as follows: As of December 31, 2018 December 31, 2017 (In United States dollars) Beginning balance 212,789 122,587 Increase in valuation allowance 74,946 90,202 Ending balance 287,735 212,789 As of December 31, 2018 and 2017, the Company had accumulated tax losses amounting to approximately $1,692,407 and $1,265,642 (the tax effect thereon being approximately $287,735 and $212,789), respectively, subject to the final agreement by the relevant tax authorities, which may be carried forward and applied to reduce future taxable income which is earned in or derived from the jurisdictions in which the tax losses were incurred. Realization of deferred tax assets associated with tax losses carry forwards is dependent upon generating sufficient taxable income prior to their expiration. A full valuation allowance is established against such tax losses at each balance sheet date since management believes it is more likely than not that such tax losses will not be utilized. |
OTHER PAYABLES
OTHER PAYABLES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 6 - OTHER PAYABLES | As of December 31, 2018 December 31, 2017 (In United States dollars) Tax and social insurance payable 9,384 6,267 Contract liabilities 215,359 57,387 Amounts due to staff - 121,942 Other payables 12,424 48,789 237,167 234,385 Contract liabilities are consideration received from the customers or billed in advance of providing goods or services promised in the future. The Company defers recognizing this consideration as revenue until it has satisfied the related performance obligation to the customer. |
PROVISION FOR ASSET RETIREMENT
PROVISION FOR ASSET RETIREMENT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 7 - PROVISION FOR ASSET RETIREMENT OBLIGATIONS | The Company's asset retirement obligations relate to future remediation and decommissioning activities at the three fluorite mines. (In United States dollars) At December 31, 2016 26,957 Exchange adjustments 702 Additions 3,037 At December 31, 2017 30,696 Exchange adjustments (2,721 ) Additions 3,408 At December 31, 2018 31,383 |
PROVISION FOR EXPLORATION ASSET
PROVISION FOR EXPLORATION ASSET COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 8 - PROVISION FOR EXPLORATION ASSET COMPENSATION | (In United States dollars) At December 31, 2016 97,704 Exchange adjustments 2,544 Additions 10,991 At December 31, 2017 111,239 Exchange adjustments (9,112 ) - At December 31, 2018 102,127 |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 9 - CAPITAL STOCK | On September 14, 2018, the Company and Arcus entered into a Share Exchange Agreement, dated September 14, 2018 with the Selling Stockholders, pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. The merger closed on September 14, 2018 and resulted in the following: Immediately prior to the Share Exchange, 6,500,000 shares of the outstanding common stock were cancelled and retired. A further 30,000 shares were canceled after the Share Exchange. On November 21, 2018, the Company completed the first private placement of 150,000 common shares at a price of $0.35 per share with a warrants option to purchase an aggregate of 50,000 common shares. The warrants will be exercisable within three years from the date of the Company receiving fund from investors at exercise price of $1.00 per common share. The Company also issued to the placement agent 15,000 common shares at a price of $2.49 per common share for the services rendered. As a result of the Share Exchange and the private placement, the cancellation of 6,530,000 shares and the issuance of 7,165,000 shares, the Company had 14,165,000 shares of common stock issued and outstanding as of December 31, 2018. |
NET SALES
NET SALES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 10 - NET SALES | December 31, 2018 December 31, 2017 (In United States dollars) Disaggregation of revenue:- Revenue from contract with customers within the scope of ASC 606, types of goods and services Sales of minerals – point in time 274,238 295,562 Commission income – point in time 393,566 - 667,804 295,562 |
SIGNIFICANT TRANSACTIONS WITH R
SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 11 - SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | (a) Loans from related persons As of December 31, 2018, loans from related persons included a HK$4 million (equivalent to $510,830) loan borrowed from the wife of one of the shareholders of TGS on May 21, 2018. The loan is unsecured, has no collateral or guarantee and carries interest at a monthly rate of 3.08% for the first month and a monthly rate of 1.08% for the rest of the term. The loan is due to be repaid on May 20, 2019. As of December 31, 2018 and 2017, loans from related persons included a HK$1 million (equivalent to $127,708 and $128,011 at December 31, 2018 and 2017, respectively) loan borrowed from the son of the CFO of TGS on October 6, 2016. The loan is unsecured, has no collateral or guarantee and carries interest at 8% per annum. The loan originally was due to be repaid on October 5, 2018, however, on October 2, 2018, the expiry date was extended to October 5, 2019. As of December 31, 2018 and 2017, loans from related persons included HK$1 million (equivalent to $127,708 and $128,011 at December 31, 2018 and 2017, respectively) loan borrowed from the sisters of one of the shareholders of TGS and the ultimate shareholder on October 31, 2016. The loans are unsecured, have no collateral or guarantee and carry interest at 8% per annum. The loans were due to be repaid on October 31, 2018, however, on October 2, 2018, the expiry date was extended to October 31, 2019. (b) Interest expense paid to related persons During the years ended December 31, 2018 and 2017, interest expense of HK$581,264 (equivalent to $74,162) and HK$160,000 (equivalent to $20,526), respectively, was paid to related persons. (c) Amounts due to shareholders On August 15, 2018, Arcus allotted and issued 884,871 ordinary shares of Arcus (equivalent to 6,999,209 shares of the Company; each share of Arcus was exchanged for 7.91 shares of the Company’s common stock) at $10 each to repay the debts to Mr. Loo Chi Kin with total amount, HK$69,410,892 (equivalent to $8,848,710), within the group. Amounts due to shareholders are unsecured, interest-free and not demand for repayment within 12 months. (d) Amount due to a director Amount due to a director included HK$576,000 (equivalent to $73,560) salaries accrued to the director, Tak Shing Eddie Wong as of December 31, 2018. The amount is unsecured, has no collateral or guarantee and is interest-free. The amount was fully paid on February 14, 2019. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Note 12 - NET LOSS PER SHARE | Loss per common share is presented under two formats: basic loss per common share and diluted loss per common share. Basic loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, plus the potentially dilutive impact of common shares equivalents (e.g. stock options and warrants). Dilutive common share equivalents consist of the incremental common shares issuable upon exercise of stock options and warrants. The following table sets forth the computation of basic and diluted net loss per share: Years Ended December 31, 2018 December 31, 2017 Numerator: Net loss $ (1,241,452 ) $ (1,230,969 ) Denominator: Weighted-average common shares, basic 4,736,382 791 Dilutive effect of warrants – – Incremental dilutive shares – – Weighted-average common shares, diluted 4,736,382 791 Net loss per share, basic and diluted $ (0.26 ) $ (1,556.25 ) |
WARRANT EQUITY
WARRANT EQUITY | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Note 13 - WARRANT EQUITY | On November 21, 2018 (“Issuance Date”), the Company issued a subscription package (the “Subscription Package”) of up to $52,500, consisting of 150,000 common shares and 50,000 warrants exercisable at $1.00 (the “Warrants”) to purchase common stock within three years from the Issuance Date, to accredited subscribers. The Company determined that these warrants are free standing financial instruments that are legally detachable and separately exercisable from the common stock. All of the Company’s outstanding warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC 480. The warrants, in specified situations, provide for certain compensation remedies to a holder if the Company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms. The Company has no plans to consummate a fundamental transaction and does not believe a fundamental transaction is likely to occur during the remaining term of the outstanding warrants. As of November 21, 2018, the Company reviewed the valuation technique and inputs used to determine the fair value of the outstanding warrants. For each of the measurement dates, the Company engaged an outside valuation company to calculate the fair value of warrants based on the Binomial Option Pricing Model (“Binomial”). Set out below the major parameters adopted in the valuation: November 21, 2018 Stock Price of the Issuer $0.3 Risk-free Rate 15.5% Volatility 65.6% Dividend Yield 0.0% The warrants outstanding and fair values at each of the respective valuation dates are summarized below: Warrant Equity Warrants Outstanding Fair Value per Share Fair Value $ Fair Value as of November 21, 2018 (issuance date) 50,000 $ 0.07 $ 3,490 Change in Fair Value of Warrant Equity - Fair Value as of December 31, 2018 50,000 $ 0.07 $ 3,490 |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 14 - COMMITMENTS | The Company is renting or leasing offices located in Hong Kong and Mongolia with total monthly payments of $17,208 and $2,500, respectively. The aggregate minimum payments over the next five years are as follows:- (In United States dollars) December 31, 2019 243,100 December 31, 2020 229,500 December 31, 2021 30,000 December 31, 2022 30,000 December 31, 2023 30,000 Thereafter 30,000 592,600 Rental expenses for all operating leases of office premises in Hong Kong and Mongolia amounted to $225,126 and $137,679 for the years ended December 31, 2018 and 2017, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 15 - SUBSEQUENT EVENTS | (a) On March 2, 2019, the Company entered into a corporation agreement with a well-known fluorite equipment manufacturer in China to invest around RMB17,000,000 (equivalent to $2,531,410) to build the plant in Mine B for producing acid-grade powder. After the manufacturer recoups all its investment by means of profit sharing, the ownership of the plant will transfer to the Company. (b) Up to March 22, 2019, the Company entered into subscription agreements with five unrelated individuals whereby the individuals subscribed for 180,000 shares of common stock of Company at a price of $2.50 per share, for cash, together with warrants to purchase 36,000 shares of common stock. The warrants are exercisable for three years at $3.00 per share. The offering is exempted from the registration requirements of the Securities Act pursuant to Regulation S. The second placement is still on going. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies | |
Principles of consolidation | These consolidated financial statements include the accounts of the Company, TGS, and all of the wholly owned subsidiaries of TGS. All intercompany balances have been eliminated in consolidation. |
Use of estimates in the preparation of consolidated financial statements | The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. By their nature, these estimates and assumptions are subject to measurement uncertainty and the effect on the consolidated financial statements of changes in such estimates and assumptions in future periods could be significant. Significant areas requiring management’s estimates and assumptions include valuation and impairment losses on mining rights and valuation of asset retirement obligations and exploration asset compensation. Other areas requiring estimates include depletion and amortization of mining rights, depreciation of property, plant and equipment and valuation allowance for deferred tax assets and deferred tax liabilities. Actual results could differ significantly from those estimates and assumptions. |
Concentration and credit risks | Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. All of the Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk. The Company operates principally in the People’s Republic of China (“PRC”) (including Hong Kong) and Mongolia and grants credit to its customers in these geographic regions. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations. As of December 31, 2018 and 2017, the Company had credit risk exposure of uninsured cash and deposits with maturities of less than one year in banks of $116,744 and $33,823, respectively. The net sales to customers representing at least 10% of net total sales are as follows: Year ended December 31, 2018 (In United States dollars) % Customer D 261,159 39 Customer E 393,566 59 654,725 98 Year ended December 31, 2017 (In United States dollars) % Customer A 133,010 45 Customer B 66,662 23 Customer C 59,059 20 258,731 88 |
Cash and cash equivalents | Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less. As of December 31, 2018 and 2017, the Company’s cash amounted to $98,121 and $38,943, respectively, and there were no cash equivalents. |
Intangible assets | Intangible assets consist of acquired mining rights and are initially measured at fair value as at the date of acquisition. Following the initial recognition, intangible assets are stated at cost less accumulated amortization and impairment losses. Intangible assets are amortized on the units-of-production method utilizing only proven and probable fluorite reserves in the depletion base. |
Property, plant and equipment | (i) Property, plant and equipment are stated at cost less accumulated depreciation. Buildings are depreciated on a straight-line basis over 15 to 40 years, representing the shorter of the remaining term of the lease or the expected useful life to the Company. (ii) Other categories of property, plant and equipment are recorded at cost and depreciated to their estimated residual values using the straight-line method over their estimated useful lives, as follows: • Leasehold improvements: 5 years or the shorter of the remaining term of the lease • Furniture and equipment: 5 years • Motor vehicles: 3 to 7 years • Factory equipment: 5 to 10 years • Mineral properties: Unit-of-production (iii) Normal repairs and maintenance are charged to operating expenses as incurred, while costs incurred that extend the useful life of an asset, improve the safety of our operations, or improve operating efficiency are capitalized. |
Impairment of long-lived assets | The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets. An impairment loss is measured and recorded based on discounted estimated future cash flows or upon an estimate of fair value that may be received in an exchange transaction. Future cash flows are estimated based on quantities of recoverable minerals, expected fluorspar prices, production levels and operating costs of production and capital, based upon the projected remaining future fluorspar production from each mining site. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of fluorspar that will be obtained after taking into account losses during processing and treatment. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, fluorspar prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties. As of December 31, 2018 and 2017, there were no impairment of long-lived assets. |
Income taxes | Deferred income taxes are provided using the asset and liability method in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 740, “Income Taxes”. Under this method, deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as a non-current asset or liability. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax assets will not be realized. FASB ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides accounting guidance on de-recognition, classification, interest and penalties, accounting in years, disclosure and transition. Interest and penalties from tax assessments, if any, are included in income taxes in the statements of operations and comprehensive income. A tax position must be more likely than not of being sustained in order to be recognized in the consolidated financial statements. As of December 31, 2018 and 2017, the Company did not have any uncertain tax positions or accrued interest and penalties related to uncertain tax positions. The Company does not expect to have a material change to its income tax provisions in the next year. |
Operating lease charges | Where the Company has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal installments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognized in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to income in the accounting period in which they are incurred. |
Restoration and remediation costs (Asset retirement obligations) | In Mongolia, the mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the pre-existing mine area average quality after completion of the mining activities. Future reclamation and remediation costs, which include extraction equipment removal and environmental remediation, are accrued at the end of each period based on management’s best estimate of the costs expected to be incurred for each project. Such estimates consider the costs of future surface and groundwater activities, current regulations, actual expenses incurred, and technology and industry standards. In accordance with FASB ASC 410, “Asset Retirement and Environmental Obligations”, the Company capitalizes the measured fair value of asset retirement obligations to mineral properties. The asset retirement obligations are accreted to an undiscounted value until the time at which they are expected to be settled. The accretion expense is charged to earnings and the actual retirement costs are recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement. On a regular basis, the Company reviews the assumptions used to estimate the expected cash flows required to settle the asset retirement obligations, including changes in estimated probabilities, amounts and timing of the settlement of the asset retirement obligations, as well as changes in any regulatory or legal obligations for each of its mineral projects. Changes in any one or more of these assumptions may cause revision of asset retirement obligations for the corresponding assets. |
Revenue recognition | On January 1, 2018, the Company adopted FASB ASC 606, “Revenue from Contracts with Customers”, applying the modified retrospective method. The adoption did not result in a material adjustment to the accumulated deficit as of January 1, 2018. The Company recognizes revenue in accordance with ASC 606 when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company has two kinds of revenue, sales of fluorite and commission income. The Company recognizes revenue when it satisfies a performance obligation in accordance with the provisions of a customer order or contract. This is achieved when control of the product has been transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product. In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The sales of the Company’s products to its customers represent a single performance obligation for which revenue is recognized at a point in time. Based on the foregoing, no significant judgment is required to determine when control of a product has been transferred to a customer. When another party is involved in providing goods or services to a customer, the Company must determine whether the obligation is to provide the specified good or service itself (i.e., the Company is the principal in the transaction) or to arrange for that good or service to be provided by the other party (i.e., the Company is an agent in the transaction). When the Company is responsible for satisfying a performance obligation, based on the ability to control the product or service provided, the Company is considered as a principal and revenue is recognized for the gross amount of consideration. When the other party is primarily responsible for satisfying a performance obligation, the Company is considered as an agent and revenue is recognized in the amount of any fee or commission to which the Company is entitled. The Company purchase minerals from suppliers and receive payments from the customers on selling certain goods. The Company has been determined as an agent for the ultimate customers in these transactions and the revenue is recorded net of the related fulfillment costs as commission income. The Company measures revenue based on the consideration it expects to be entitled to receive in exchange for its products. The standard terms and conditions of customer orders and contracts does not provide its customers with the right of return (except for quality), price protection, rebates or discounts. All sales are based on firm customer orders with fixed terms and conditions, which generally cannot be modified. See footnote 10 regarding the Company's revenue disaggregated by reporting segment. |
Provision for exploration asset compensation | The Government of Mongolia issued a policy that requires all mining companies to pay compensation to the Government if the exploration work on their mining license area was funded by the Government. The compensation amount for the exploration work done has been estimated by the Mineral Resources Authority of Mongolia. The provision for exploration expenditure is calculated as the discounted net present value of estimated future net cash outflows of the reclamation and closure costs. |
Cost of sales | Cost of sales includes raw material costs, mining overhead including depreciation expenses and shipping and handling costs related to the movement of finished goods from mining locations to customer locations. Additionally, cost of sales includes customs duties, product packaging cost, the cost of tooling and inventory shrinkage and damages. |
Administrative expenses | Administrative expenses include salaries and benefits, consulting, audit, tax, legal, insurance, rent and utilities, and other general operating expenses. |
Shipping and Handling Costs | Shipping and handling costs are classified as cost of product sales and processing and are expensed as incurred. |
Foreign currency transactions and translations | These consolidated financial statements are presented in United States dollars (“USD”), which is different from TGS subsidiaries’ functional currencies. The functional currency of the subsidiaries in Mongolia, Khan Shashir LLC and Shek Hung Gold LLC, is the Mongolian Tugrik (“MNT”). The functional currency of the subsidiary in the People’s Republic of China (“PRC”), Best Metro Import & Export Trading (Inner Mongolia) Limited is the Chinese Renminbi (“RMB”), while the functional currency of all other subsidiaries is the Hong Kong dollar (“HKD”). The functional currency of TGS is the USD. The financial statements of foreign subsidiaries where HKD, MNT and RMB are the functional currencies and which have transactions denominated in non-HKD/MNT/RMB currencies are translated into HKD/MNT/RMB at the exchange rates existing on that date. The translation of local currencies into HKD/MNT/RMB creates transaction adjustments which are included in the statements of operations and comprehensive income. The financial statements of TGS’s foreign subsidiaries, where non-USD currencies are the functional currencies, are translated into USD using exchange rates in effect at period end for assets and liabilities and average exchange rates during each reporting period for the statement of operations. Adjustments resulting from translation of these financial statements are reflected as a separate component of stockholders’ deficit. |
Comprehensive loss | Comprehensive loss is defined as all changes in equity/(deficit), exclusive of transactions with stockholders, such as capital investments. Comprehensive loss includes net loss and changes in certain assets and liabilities that are reported directly in equity. |
Basic and Diluted Loss per Share | The Company computes loss per share in accordance with FASB ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding common shares during the period. Dilutive loss per share excludes all common stock equivalents if their effect is anti-dilutive. As of December 31, 2018, the Company had warrants outstanding which could potentially dilute basic loss per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive due to the net losses. |
Fair value measurements | The Company complies with FASB ASC 820, “Fair Value Measurements”, which clarifies the definition of fair value, prescribes methods for measuring fair value and establishes a fair value hierarchy to classify the inputs used in measuring fair value. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:- Level 1 Level 2 Level 3 Financial instruments are measured as follows:- The carrying amounts of cash and cash equivalents, other receivables, deposits, accrued charges, other payables, loans from related persons and amounts due to shareholders, approximate their fair values due to the short term nature of these instruments. |
Warrants | ASC 815-40, “Contracts in Entity’s Own Equity”, requires freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability. Under the provisions of ASC 815-40, a contract designated as an asset or a liability must be carried at fair value on a company’s balance sheet, with any changes in fair value recorded in the Company’s results of operations. A contract designated as an equity instrument must be included within equity, and no fair value adjustments are required from period to period. |
Recent changes in accounting standards | Recently Adopted during the year In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as “ASC 606”). ASC 606 establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this guidance effective January 1, 2018 using the modified retrospective approach, and it did not materially effect the Company’s consolidated financial statements. The Company determined that adoption of the ASU did not have a significant impact on the Company’s sales. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance has no material impact on the consolidated financial statements of the Company. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Income Tax Accounting Implications of the Tax Cuts and Jobs Act. This Update states that the Tax Cuts and Jobs Act (the “Act”) changes existing United States tax law and includes numerous provisions that will affect businesses. The Act, for instance, introduces changes that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits. The Act has international tax consequences for many companies that operate internationally. This Update addresses the recognition of taxes payable or refundable for the current year and the recognition of deferred tax liabilities and deferred tax assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. For the Company, this Update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. The adoption of ASU 2018-05 did not a material impact on the consolidated financial statements of the Company. Pending Adoption as at year end In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. In November 2018, FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, which amends the scope and transition requirements of ASU 2016-13. Topic 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Topic 326 will become effective for the Company beginning January 1, 2020, with early adoption permitted, on a modified retrospective approach. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. This Update states a private company (reporting entity) may elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. This Update also states indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For the Company, this Update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. All entities are required to apply the amendments in this Update retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. Early adoption is permitted. The adoption of ASU 2018-17 is not expected to have a material impact on the Company’s consolidated financial statements in 2019. The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies Tables Abstract | |
Schedule of net sales to customer | The net sales to customers representing at least 10% of net total sales are as follows: Year ended December 31, 2018 (In United States dollars) % Customer D 261,159 39 Customer E 393,566 59 654,725 98 Year ended December 31, 2017 (In United States dollars) % Customer A 133,010 45 Customer B 66,662 23 Customer C 59,059 20 258,731 88 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property Plant And Equipment | |
Property, plant and equipment | Property, plant and equipment include the following:- December 31, 2018 December 31, 2017 (In United States dollars) Buildings 164,223 178,876 Leasehold improvements 119,887 120,172 Furniture, fixture and equipment 176,883 126,086 Motor vehicles 245,217 281,691 Factory equipment 23,936 26,072 Mineral properties 1,276,766 1,346,814 Less: accumulated depreciation (481,672 ) (475,843 ) 1,525,240 1,603,868 Construction in progress 32,382 35,271 Total property, plant and equipment 1,557,622 1,639,139 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Intangible Assets | |
Schedule of intangible assets | As of December 31, 2018 and 2017, the Company owned three mining rights in Mongolia. (In United States dollars) Cost At December 31, 2018 and 2017 1,097,362 Accumulated amortization and impairment loss At December 31, 2018 and 2017 - Net book value At December 31, 2018 1,097,362 At December 31, 2017 1,097,362 |
Schedule of intangible assets future amortization expense | As of December 31, 2018, future minimum amortization expenses in respect of intangible assets are as follows: Year ending December 31, (In United States dollars) 2019 8,908 2020 53,425 2021 120,202 2022 120,202 2023 120,202 Thereafter 674,423 1,097,362 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of deferred tax assets and liabilities | The Company’s deferred tax assets and liabilities as of December 31, 2018 and 2017 are attributable to the following: As of December 31, 2018 December 31, 2017 (In United States dollars) Tax loss carry forwards 287,735 212,789 Less: Valuation allowance (287,735 ) (212,789 ) - - |
Summary of changes in valuation allowance | Changes in valuation allowance are as follows: As of December 31, 2018 December 31, 2017 (In United States dollars) Beginning balance 212,789 122,587 Increase in valuation allowance 74,946 90,202 Ending balance 287,735 212,789 |
OTHER PAYABLES (Tables)
OTHER PAYABLES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Payables | |
Schedule of other payables | As of December 31, 2018 December 31, 2017 (In United States dollars) Tax and social insurance payable 9,384 6,267 Contract liabilities 215,359 57,387 Amounts due to staff - 121,942 Other payables 12,424 48,789 237,167 234,385 |
PROVISION FOR ASSET RETIREMEN_2
PROVISION FOR ASSET RETIREMENT OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Provision For Asset Retirement Obligations | |
Schedule of asset retirement obligations | The Company's asset retirement obligations relate to future remediation and decommissioning activities at the three fluorite mines. (In United States dollars) At December 31, 2016 26,957 Exchange adjustments 702 Additions 3,037 At December 31, 2017 30,696 Exchange adjustments (2,721 ) Additions 3,408 At December 31, 2018 31,383 |
PROVISION FOR EXPLORATION ASS_2
PROVISION FOR EXPLORATION ASSET COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Provision For Exploration Asset Compensation | |
Summary of provision for exploration asset compensation | (In United States dollars) At December 31, 2016 97,704 Exchange adjustments 2,544 Additions 10,991 At December 31, 2017 111,239 Exchange adjustments (9,112 ) - At December 31, 2018 102,127 |
NET SALES (Tables)
NET SALES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Net Sales | |
Summary of net sales | December 31, 2018 December 31, 2017 (In United States dollars) Disaggregation of revenue:- Revenue from contract with customers within the scope of ASC 606, types of goods and services Sales of minerals – point in time 274,238 295,562 Commission income – point in time 393,566 - 667,804 295,562 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Net Loss Per Share | |
Schedule of earnings per share basic and diluted | Years Ended December 31, 2018 December 31, 2017 Numerator: Net loss $ (1,241,452 ) $ (1,230,969 ) Denominator: Weighted-average common shares, basic 4,736,382 791 Dilutive effect of warrants – – Incremental dilutive shares – – Weighted-average common shares, diluted 4,736,382 791 Net loss per share, basic and diluted $ (0.26 ) $ (1,556.25 ) |
WARRANT EQUITY (Tables)
WARRANT EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Warrant Equity | |
Summary of major parameters adopted in valuation | November 21, 2018 Stock Price of the Issuer [US$0.3] Risk-free Rate [15.5%] Volatility [65.6%] Dividend Yield [0.0%] |
Schedule of warrants outstanding and fair value | The warrants outstanding and fair values at each of the respective valuation dates are summarized below: Warrant Equity Warrants Outstanding Fair Value per Share Fair Value $ Fair Value as of 21.11.2018 (issuance date) - $ - $ 3,490 Change in Fair Value of Warrant Equity - Fair Value as of period ended December 31, 2018 50,000 $ 0.07 $ 3,490 |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments Tables Abstract | |
Schedule of future minimum payment | The aggregate minimum payments over the next five years are as follows:- (In United States dollars) December 31, 2019 243,100 December 31, 2020 229,500 December 31, 2021 30,000 December 31, 2022 30,000 December 31, 2023 30,000 Thereafter 30,000 592,600 |
NATURE OF OPERATIONS AND GOIN_2
NATURE OF OPERATIONS AND GOING CONCERN (Detail Narrative) - USD ($) | Sep. 14, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Entity incorporation, state country name | Nevada | ||
Entity incorporation, date of incorporation | Dec. 1, 2016 | ||
Operating loss | $ (1,241,452) | $ (1,230,969) | |
Common stock shares issued | 14,165,000 | 14,165,000 | |
Common stock shares outstanding | 14,165,000 | 14,165,000 | |
Current liabilities exceeded current asset | $ 1,069,780 | ||
Share Exchange Agreement [Member] | |||
Common stock shares issued for exchange shares | 7,000,000 | ||
Common stock shares cancelled | 6,500,000 | ||
Common stock shares to be cancelled | 30,000 | ||
Common stock cancellation for exchange shares | 6,530,000 | ||
Ownership percentage | 100.00% | ||
Common stock shares issued | 14,000,000 | ||
Common stock shares outstanding | 14,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net sales | $ 667,804 | $ 295,262 |
Customer D [Member] | ||
Net sales | $ 261,159 | |
Net sales percentage | 39.00% | |
Customer E [Member] | ||
Net sales | $ 393,566 | |
Net sales percentage | 59.00% | |
Total [Member] | ||
Net sales | $ 654,725 | $ 258,731 |
Net sales percentage | 98.00% | 88.00% |
Customer A [Member] | ||
Net sales | $ 133,010 | |
Net sales percentage | 45.00% | |
Customer B [Member] | ||
Net sales | $ 66,662 | |
Net sales percentage | 23.00% | |
Customer C [Member] | ||
Net sales | $ 59,059 | |
Net sales percentage | 20.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash and cash equivalents | $ 98,121 | $ 38,943 | $ 101,278 |
Uninsured cash and deposits | $ 116,744 | $ 33,823 | |
Minimum [Member] | |||
Net sales percentage | 10.00% | ||
Furniture and Equipment [Member] | |||
Estimated useful life | 5 years | ||
Leasehold Improvements [Member] | |||
Estimated useful life | 5 years | ||
Buildings [Member] | Minimum [Member] | |||
Estimated useful life | 15 years | ||
Buildings [Member] | Maximum [Member] | |||
Estimated useful life | 40 years | ||
Factory equipment [Member] | Minimum [Member] | |||
Estimated useful life | 5 years | ||
Factory equipment [Member] | Maximum [Member] | |||
Estimated useful life | 10 years | ||
Motor vehicles [Member] | Minimum [Member] | |||
Estimated useful life | 3 years | ||
Motor vehicles [Member] | Maximum [Member] | |||
Estimated useful life | 7 years |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, plant and equipment | $ 1,525,240 | $ 1,603,868 |
Less: accumulated depreciation | (481,672) | (475,843) |
Construction in progress | 32,382 | 35,271 |
Total property, plant and equipment | 1,557,622 | 1,639,139 |
Building [Member] | ||
Property, plant and equipment | 164,223 | 178,876 |
Leasehold Improvements [Member] | ||
Property, plant and equipment | 119,887 | 120,172 |
Furniture, fixture and equipment [Member] | ||
Property, plant and equipment | 176,883 | 126,086 |
Motor Vehicles [Member] | ||
Property, plant and equipment | 245,217 | 281,691 |
Factory Equipment [Member] | ||
Property, plant and equipment | 23,936 | 26,072 |
Mineral Properties [Member] | ||
Property, plant and equipment | $ 1,276,766 | $ 1,346,814 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Depreciation of property, plant and equipment | $ 52,149 | $ 101,792 |
Administrative Expense [Member] | ||
Depreciation of property, plant and equipment | 23,947 | 66,514 |
Cost of Sales [Member] | ||
Depreciation of property, plant and equipment | $ 28,202 | $ 35,278 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible Assets Details Abstract | ||
Beginning balance | $ 1,097,362 | $ 1,097,362 |
Accumulated amortization and impairment loss | ||
Ending balance | $ 1,097,362 | $ 1,097,362 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Intangible Assets Details 1Abstract | ||
2019 | $ 8,908 | |
2020 | 53,425 | |
2021 | 120,202 | |
2022 | 120,202 | |
2023 | 120,202 | |
Thereafter | 674,423 | |
Total Intangible Assets | $ 1,097,362 | $ 1,097,362 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes Details Abstract | |||
Tax loss carry forwards | $ 287,735 | $ 212,789 | |
Less: Valuation allowance | (287,735) | (212,789) | $ (122,587) |
Net deferred tax asset |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes Details 1Abstract | ||
Beginning balance | $ 212,789 | $ 122,587 |
Increase in valuation allowance | 7494600.00% | 9020200.00% |
Ending balance | $ 287,735 | $ 212,789 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes Details Narrative Abstract | |||
Accumulated tax losses | $ 1,692,407 | $ 1,265,642 | |
Deferred Tax Assets | $ 287,735 | $ 212,789 | $ 122,587 |
OTHER PAYABLES (Details)
OTHER PAYABLES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Other Payables Details Abstract | ||
Tax and social insurance payable | $ 9,384 | $ 6,267 |
Contract liabilities | 215,359 | 57,387 |
Amounts due to staff | 121,942 | |
Other payables | 12,424 | 48,789 |
Other payables total | $ 237,167 | $ 234,385 |
PROVISION FOR ASSET RETIREMEN_3
PROVISION FOR ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Provision For Asset Retirement Obligations Details Abstract | ||
Beginning balance | $ 30,696 | $ 26,957 |
Exchange adjustments | (2,721) | 702 |
Additions | 3,408 | 3,037 |
Ending balance | $ 31,383 | $ 30,696 |
PROVISION FOR EXPLORATION ASS_3
PROVISION FOR EXPLORATION ASSET COMPENSATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Provision For Exploration Asset Compensation Details Abstract | ||
Beginning balance | $ 111,239 | $ 97,704 |
Exchange adjustments | (9,112) | 2,544 |
Additions | 10,991 | |
Ending balance | $ 102,127 | $ 111,239 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - $ / shares | Sep. 14, 2018 | Dec. 31, 2018 | Nov. 21, 2018 | Dec. 31, 2017 |
Common stock, issued | 14,165,000 | 14,165,000 | ||
Common stock, outstanding | 14,165,000 | 14,165,000 | ||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||
Private Placement [Member] | Investors [Member] | ||||
Common stock, issued | 150,000 | |||
Common stock, par value | $ 0.35 | |||
Class of warrant, outstanding | 50,000 | |||
Exercise price of warrants | $ 1 | |||
Placement Agent [Member] | ||||
Common stock, issued | 15,000 | |||
Common stock, par value | $ 2.49 | |||
Share Exchange Agreement [Member] | ||||
Common stock shares issued for exchange shares | 7,000,000 | |||
Common stock shares cancelled | 6,500,000 | |||
Common stock shares to be cancelled | 30,000 | |||
Common stock cancellation for exchange shares | 6,530,000 | |||
Common stock, issued | 14,000,000 | |||
Common stock, outstanding | 14,000,000 | |||
Share Exchange Agreement [Member] | Private Placement [Member] | ||||
Common stock cancellation for exchange shares | 6,530,000 | |||
Stock issued during period, new Issues | 7,165,000 | |||
Common stock, issued | 14,165,000 | |||
Common stock, outstanding | 14,165,000 |
NET SALES (Details)
NET SALES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of revenue:- | ||
Revenue from contract with customers within the scope of ASC 606, types of goods and services | ||
Sales of minerals – point in time | 274,238 | 295,562 |
Commission income – point in time | 393,566 | |
Net sales | $ 667,804 | $ 295,262 |
SIGNIFICANT TRANSACTIONS WITH_2
SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Details Narrative) - USD ($) | Aug. 15, 2018 | Oct. 06, 2016 | May 21, 2018 | Oct. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Loans from related parties | $ 766,246 | $ 256,022 | ||||
Interest expense | 83,548 | 250,970 | ||||
Wife of shareholder [Member] | Loans Payable [Member] | ||||||
Loans from related parties | $ 510,830 | 510,830 | ||||
Interest rate, description | Interest at a monthly rate of 3.08% for the first month and a monthly rate of 1.08% for the rest of the term | |||||
Maturity date | May 20, 2019 | |||||
Son of CFO [Member] | Loans Payable [Member] | ||||||
Loans from related parties | $ 1,000,000 | 127,708 | 128,011 | |||
Interest rate | 8.00% | |||||
Maturity date | Oct. 2, 2018 | |||||
Extended maturity date | Oct. 5, 2019 | |||||
Sister of Shareholder [Member] | Loans Payable [Member] | ||||||
Loans from related parties | $ 1,000,000 | 127,708 | 128,011 | |||
Interest rate | 8.00% | |||||
Maturity date | Oct. 31, 2018 | |||||
Extended maturity date | Oct. 31, 2019 | |||||
Related persons [Member] | Loans Payable [Member] | ||||||
Interest expense | $ 74,162 | $ 20,526 | ||||
Mr. Loo Chi Kin [Member] | Loans Payable [Member] | ||||||
Common stock shares issued upon extinguishment of debt | 884,871 | |||||
Share price | $ 10 | |||||
Extinguishment of debt, amount | $ 8,848,710 | |||||
Issuance of common stock | 6,999,209 | |||||
Common stock exchanged shares | $ 7.91 | |||||
Director [Member] | Loans Payable [Member] | ||||||
Loans from related parties | $ 73,560 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | ||
Net loss | $ (1,241,452) | $ (1,230,969) |
Denominator: | ||
Weighted-average common shares, basic | 4,736,382 | 791 |
Dilutive effect of warrants | ||
Incremental dilutive shares | ||
Weighted-average common shares, diluted | 4,736,382 | 791 |
Net loss per share, basic and diluted | $ (0.26) | $ (1,556.25) |
Warrant Equity (Details)
Warrant Equity (Details) | 1 Months Ended |
Nov. 21, 2018$ / shares | |
Warrant Equity Details Abstract | |
Stock Price of the Issuer | $ 0.3 |
Risk-free Rate | 15.50% |
Volatility | 65.60% |
Dividend Yield | 0.00% |
Warrant Equity (Details 1)
Warrant Equity (Details 1) | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Warrant Equity | |
Fair value warrants outstanding begining balance | shares | 50,000 |
Change in Fair Value of Warrant Equity | |
Fair value warrants outstanding ending balance | shares | 50,000 |
Fair value per share begining balance | $ / shares | $ 0.07 |
Change in Fair Value of Warrant Equity | |
Fair value per share ending balance | $ / shares | $ 0.07 |
Fair Value warrants outstanding begining balance | $ 3,490 |
Change in Fair Value of Warrant Equity | |
Fair value warrants outstanding ending balance | $ 3,490 |
Warrant Equity (Details Narrati
Warrant Equity (Details Narrative) - Subscription package [Member] | Nov. 08, 2018USD ($)$ / sharesshares |
Amount of subscription package issued | $ | $ 52,500 |
Class of warrants or rights reserved for future issuance | 150,000 |
Common stock shares reserved for future issuance | 50,000 |
Exercise price | $ / shares | $ 1 |
Term of warrants | 3 years |
COMMITMENTS (Details)
COMMITMENTS (Details) | Dec. 31, 2018USD ($) |
Commitments Details Abstract | |
December 31, 2019 | $ 243,100 |
December 31, 2020 | 229,500 |
December 31, 2021 | 30,000 |
December 31, 2022 | 30,000 |
December 31, 2023 | 30,000 |
Thereafter | 30,000 |
Aggregate minimum payments | $ 592,600 |
COMMITMENTS (Details Narrative)
COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
HONG KONG | ||
Rental expense periodic payments | $ 17,208 | |
Frequency of periodic payments | Monthly | |
MONGOLIA | ||
Rental expense periodic payments | $ 2,500 | |
Frequency of periodic payments | Monthly | |
HONG KONG and MONGOLIA | ||
Operating lease, rental expense | $ 225,126 | $ 137,679 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Unrelated individual [Member] | 1 Months Ended | |
Mar. 22, 2019Number$ / sharesshares | Mar. 02, 2019USD ($) | |
Subscription agreement [Member] | ||
Number of individuals | Number | 5 | |
Common stock shares subscribed | 180,000 | |
Share price | $ / shares | $ 2.50 | |
Subscription agreement [Member] | Warrant [Member] | ||
Class of warrants or rights issued | 36,000 | |
Common stock shares reserved for future issuance | 36,000 | |
Term of warrants | 3 years | |
Exercise price | $ / shares | $ 3 | |
Corporation agreement [Member] | ||
Amount to be invested to build plant in mine B | $ | $ 2,531,410 |