Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 14, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Victory Commercial Management Inc. | |
Entity Central Index Key | 0001723083 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 21,711,000 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS : | ||
Cash and cash equivalents | $ 176,667 | $ 122,884 |
Restricted cash | 26,788 | 27,223 |
Tenant and sundry receivables, net of allowance for doubtful accounts | 316,005 | 469,317 |
Prepaid expenses and other assets | 466,422 | 526,834 |
TOTAL CURRENT ASSETS | 985,882 | 1,146,258 |
Rental properties, net | 20,543,684 | 21,334,015 |
Property and equipment, net | 339,013 | 430,063 |
Intangible assets, net | 14,919 | 17,640 |
ROU assets, net | 348,448 | 484,178 |
Loan and interest receivable, net | 4,260,697 | 6,087,914 |
TOTAL ASSETS | 26,492,643 | 29,500,068 |
CURRENT LIABILITIES: | ||
Bank loans payable, net (in default) | 7,511,591 | 7,633,412 |
Bank loans payable, net | 58,483,681 | 59,288,001 |
Accounts payable and accrued liabilities | 12,232,367 | 8,938,941 |
Deferred revenue | 3,783,314 | 3,882,434 |
Lease liabilities payable-current | 17,768 | 22,755 |
TOTAL CURRENT LIABILITIES | 82,028,721 | 79,765,543 |
Property financing agreements payable | 72,961,523 | 77,464,781 |
Lease liabilities payable-non current | 361,916 | 498,509 |
Other payables | 19,594,756 | 19,906,698 |
Loans payable to related parties | 12,382,578 | 11,934,791 |
Due to shareholder | 66,396,293 | 65,931,644 |
Interest payable to related parties | 11,603,503 | 11,520,609 |
TOTAL LIABILITIES | 265,329,290 | 267,022,575 |
Commitments and Contingencies | ||
DEFICIT: | ||
Common stock, $0.0001 par value, 600,000,000 shares authorized; 21,711,000 and 21,711,000 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 2,171 | 2,171 |
Paid-in capital | 11,827,188 | 11,827,188 |
Subscription receivable | ||
Accumulated deficit | (207,104,990) | (203,808,349) |
Accumulated other comprehensive loss | (55,938) | (2,242,729) |
Total stockholder's deficit attributable to the Company's common shareholders | (195,331,569) | (194,221,719) |
Noncontrolling interest | (43,505,078) | (43,300,788) |
TOTAL DEFICIT | (238,836,647) | (237,522,507) |
TOTAL LIABILITIES AND DEFICIT | $ 26,492,643 | $ 29,500,068 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 21,711,000 | 21,711,000 |
Common stock, shares outstanding | 21,711,000 | 21,711,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues | ||||
Total revenues | $ 1,626,403 | $ 2,198,140 | $ 3,114,406 | $ 4,384,645 |
Operating expenses | ||||
Selling expenses | 968,851 | 1,105,399 | 1,894,867 | 2,348,808 |
Depreciation and amortization | 268,462 | 326,355 | 553,882 | 646,330 |
Payroll and payroll related expenses | 296,756 | 519,648 | 627,284 | 1,027,325 |
Business taxes | 136,067 | 135,379 | 232,915 | 264,843 |
Lease expenses | 47,122 | 139,956 | 120,122 | 322,475 |
Other general and administrative expenses | 184,318 | 3,674,625 | 342,886 | 4,014,901 |
Total operating expenses | 1,901,576 | 5,901,362 | 3,771,956 | 8,624,682 |
Loss from operations | (275,173) | (3,703,222) | (657,550) | (4,240,037) |
Other income (expense) | ||||
Interest income | 124,674 | 207,878 | 272,527 | 378,484 |
Interest - loans | (988,295) | (1,055,274) | (2,010,258) | (2,098,494) |
Interest - ROU and other capitalized liabilities | (507,286) | (649,039) | (1,089,015) | (1,316,047) |
Interest - related parties | (132,259) | (134,180) | (266,393) | (268,376) |
Gain (loss) from foreign currency transactions | 90,381 | (524,372) | (367,986) | 18,358 |
Other income | 31,587 | 7,399 | 37,842 | 9,370 |
Total other (expense), net | (1,381,198) | (2,147,588) | (3,423,283) | (3,276,705) |
Loss before provision for income taxes | (1,656,371) | (5,850,810) | (4,080,833) | (7,516,742) |
Provision for income taxes | ||||
Net loss | (1,656,371) | (5,850,810) | (4,080,833) | (7,516,742) |
Net loss attributable to noncontrolling interest | (334,132) | (778,625) | (784,192) | (1,023,628) |
Net loss attributable to the Company's common shareholders | $ (1,322,239) | $ (5,072,185) | $ (3,296,641) | $ (6,493,114) |
Per Common Share - basic and diluted: | ||||
Net loss per Company's common share | $ (0.06) | $ (0.23) | $ (0.15) | $ (0.31) |
Weighted-average shares outstanding, basic and diluted | 21,711,000 | 21,711,000 | 21,711,000 | 21,230,635 |
Comprehensive income (loss) | ||||
Net loss | $ (1,656,371) | $ (5,850,810) | $ (4,080,833) | $ (7,516,742) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | (744,412) | 4,188,504 | 2,766,693 | (302,829) |
Comprehensive (loss) | (2,400,783) | (1,662,306) | (1,314,140) | (7,819,571) |
Comprehensive income (loss) attributable to non-controlling interest | (137,015) | 853,304 | 579,902 | (28,409) |
Comprehensive (loss) attributable to the Company's common shareholders | (2,263,768) | (2,515,610) | (1,894,042) | (7,791,162) |
Rental Income [Member] | ||||
Revenues | ||||
Total revenues | 505,475 | 782,784 | 974,462 | 1,567,497 |
Management Fee Income [Member] | ||||
Revenues | ||||
Total revenues | 1,007,455 | 1,216,510 | 1,911,601 | 2,480,448 |
Other Income [Member] | ||||
Revenues | ||||
Total revenues | $ 113,473 | $ 198,846 | $ 228,343 | $ 336,700 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Deficit (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interest [Member] | Total |
Balance beginning at Dec. 31, 2018 | $ 2,070 | $ 10,816,289 | $ (194,188,636) | $ (3,739,981) | $ (42,242,097) | $ (229,352,355) |
Balance beginning, shares at Dec. 31, 2018 | 20,700,000 | |||||
Initial public offering | $ 101 | 1,010,899 | 1,011,000 | |||
Initial public offering, shares | 1,011,000 | |||||
Net loss | (6,493,114) | (1,023,628) | (7,516,742) | |||
Foreign currency translation adjustment | (274,420) | (28,409) | (302,829) | |||
Balance ending at Jun. 30, 2019 | $ 2,171 | 11,827,188 | (200,681,750) | (4,014,401) | (43,294,134) | (236,160,926) |
Balance ending, shares at Jun. 30, 2019 | 21,711,000 | |||||
Balance beginning at Dec. 31, 2019 | $ 2,171 | 11,827,188 | (203,808,349) | (2,242,729) | (43,300,788) | (237,522,507) |
Balance beginning, shares at Dec. 31, 2019 | 21,711,000 | |||||
Net loss | (3,296,641) | (784,192) | (4,080,833) | |||
Foreign currency translation adjustment | 2,186,791 | 579,902 | 2,766,693 | |||
Balance ending at Jun. 30, 2020 | $ 2,171 | $ 11,827,188 | $ (207,104,990) | $ (55,938) | $ (43,505,078) | $ (238,836,647) |
Balance ending, shares at Jun. 30, 2020 | 21,711,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (4,080,833) | $ (7,516,742) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 553,882 | 646,331 |
Amortization of debt issuance costs | 26,830 | 27,870 |
Foreign currency exchange loss (gain) on loan and interest repayments to related party | 367,986 | (18,358) |
(Gain) on disposal of fixed assets | (1,959) | |
Allowance for doubtful accounts | 41,086 | 3,126,023 |
Non cash operating lease expenses | (1,833) | (6,825) |
Changes in operating assets and liabilities | ||
Decrease in tenant and sundry receivables | 104,434 | 70,009 |
Decrease in prepaid expense and other assets | 54,181 | 73,353 |
(Increase) in short-term loan interest receivable | (272,381) | (378,339) |
Increase in SML interest payable | 1,078,099 | 1,265,922 |
Increase in accounts payable and accrued liabilities | 3,421,978 | 1,910,998 |
(Decrease) Increase in deferred rental income | (37,084) | 423,503 |
Increase in interest payable to related party | 266,197 | 268,283 |
Increase (decrease) in other payables | 32,874 | (546,218) |
Decrease in lease liabilities payable | (3,673) | (61,814) |
Increase in property financing agreements payable | 10,916 | 48,152 |
Net Cash (Used in) Operating Activities | 1,562,659 | (669,812) |
Cash Flows from Investing Activities: | ||
Capital expenditures - fixed assets and improvements | (14,318) | |
Repayment (advances) of loan receivable | 1,971,715 | (2,596,867) |
Net Cash Provided by (Used in) Investing Activities | 1,971,715 | (2,611,185) |
Cash Flows from Financing Activities: | ||
Proceeds from bank loans | 114,970 | 1,508,745 |
Proceeds from initial public offering | 1,011,000 | |
Repayment of bank loans | (270,997) | |
Advance from shareholder | 673,578 | 949,420 |
Advance from related individual | 100,000 | 40,000 |
Repayment of property financing agreements payable | (4,367,418) | |
Net Cash Provided by (Used in) Financing Activities | (3,478,870) | 3,238,168 |
Effect of exchange rate changes on cash and cash equivalents | (2,156) | 22,058 |
Net increase(decrease) in cash, cash equivalents and restricted cash | 53,348 | (20,770) |
Cash, cash equivalents and restricted cash at beginning of periods | 150,107 | 319,120 |
Cash, cash equivalents and restricted cash at end of periods | 203,455 | 298,350 |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | ||
Cash and cash equivalents at beginning of periods | 122,884 | 188,921 |
Restricted cash at beginning of periods | 27,223 | 130,199 |
Cash, cash equivalents and restricted cash at beginning of periods | 150,107 | 319,120 |
Cash and cash equivalents at end of periods | 176,667 | 177,975 |
Restricted cash at end of periods | 26,788 | 120,375 |
Cash, cash equivalents and restricted cash at end of periods | 203,455 | 298,350 |
Supplemental Disclosure Cash Flow Information: | ||
Interest | 968,074 | |
Income tax | ||
Non-cash Investing and Financing Activities: | ||
Right of use assets and lease liabilities payable | $ 348,448 | $ 232,631 |
Organization and Segment Inform
Organization and Segment Information | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Segment Information | NOTE 1 – ORGANIZATION AND SEGMENT INFORMATION Organization Victory Commercial Management Inc. (hereinafter referred to as “VCM”, and where appropriate, the terms “Company”, “we”, “us” or “our” are also referred to VCM and its wholly owned and majority owned subsidiaries) was incorporated on July 5, 2017 under the laws of Nevada. On July 13, 2017, VCM formed a wholly-owned subsidiary, Victory Commercial Investment Ltd. (“VCI”) under the laws of British Virgin Islands. Sino Pride Development Limited (“Sino Pride”) is a Hong Kong company, incorporated on May 26, 1989. Sino Pride is a holding company that directly owns an 80% equity interest in Dalian Victory Plaza Development Co., Ltd. (“DVPD”) and directly owns a 95% equity interest in Dalian Victory Business Management Co., Ltd. (“DVBM”). DVPD was incorporated as a Sino-foreign cooperative joint venture on March 29, 1993 under the laws of the People’s Republic of China (“PRC” or “China”). Sino Pride owns 80% equity interest of DVPD while Dalian Victory Development Co., Limited (“DVDC”), a state-owned enterprise in China, owns a 20% equity interest in DVPD. DVBM was incorporated as a joint venture on September 12, 2000 under the laws of the PRC. Sino Pride owns a 95% equity interest in DVBM and DVPD owns a 5% equity interest in DVBM. Dalian Victory Property Management Co., Ltd. (“DVPM”) was incorporated on June 6, 2018 as limited liability company under the laws of the PRC. Sino Pride owns 100% of the equity of DVPM. DVPM was formed as a property management company and will play a similar role as DVBM to improve the management of Victory Plaza. DVPM has not commenced operations. Iven International Group Limited, is a company registered in Hong Kong (“Iven”). From October 31, 2016 to June 30, 2017, Alex Brown beneficially owned 100% of Iven, among which, a 70% equity interest was held directly, and a 30% equity interest was held indirectly through Dalian Yiwen New Materials Technology Development Co., Ltd, a PRC entity 80% owned by Alex Brown and 20% owned by his spouse. On June 30, 2017, Alex Brown and Dalian Yiwen New Material Technology Development Co., Ltd transferred their respective ownership of Iven to Winner Ascent Investment Limited, a Hong Kong limited liability company solely owned by Alex Brown. Victory Plaza Holding Limited, (“VP Holding”) a BVI company, is the original owner of Sino Pride. VP Holding incurred significant losses from the operations of Sino Pride and its subsidiaries DVPD and DVBM. VP Holding and Sino Pride had no relationship or affiliation with us or Alex Brown prior to the corporate restructuring. November 30, 2016 Transaction In November 2016, Iven entered and executed an agreement of “Assignment of Common Stock and Debt Rights” (“the Original Agreement”) with VP Holding, the former shareholder of Sino pride. Pursuant to the Original Agreement, Iven acquired all 30,000,000 shares of common stock of Sino Pride then outstanding and assumed a shareholder loan and loan interest totaling $52,750,000 (Sino Pride owed to VP Holding) for a nominal consideration of HK$1 (approximately $0.13) from VP Holding. Change of ownership in Sino Pride from VP Holding to Iven had no impact on Sino Pride’s ownership in DVPD and DVBM (operating entities). Iven was a private shell company with no operations and with nominal assets, which is 100% directly and indirectly owned by Mr. Brown. Iven was the legal acquirer in the November 30, 2016 acquisition. At the date of acquisition, Sino Pride was a holding company of two Chinese base operating entities, DVPD and DVBM. The accounting acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities as per Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 805-10-55-13. Thus, Sino Pride and Subsidiaries were treated as the accounting acquirer in connection with the November 2016 transaction. The November 2016 transaction was treated as a reverse acquisition or recapitalization. The accounting is similar to that resulting from a reverse acquisition, except that no goodwill or other intangible assets should be recorded. Accordingly, the historical financial statements are those of Sino Pride and its Subsidiaries. September 4, 2017 Transaction On September 4, 2017, VCI signed an agreement of “Assignment of All Outstanding Shares and All Debt Rights Agreement” (“the Agreement”) with Iven. Pursuant to the Agreement, VCI acquired all 30,000,000 shares of common stock of Sino Pride then outstanding and assumed shareholder debt and loan rights totaling HK$ 493,807,633 (approximately $64,208,000) (Sino Pride owed to VP Holding) including an outstanding shareholder loan of HK$ 408,409,628 (approximately $53,093,000) for a nominal consideration of HK$ 1 (approximately $0.13) from Iven. The change of ownership in Sino Pride from Iven to VCI had no impact on Sino Pride’s ownership in DVPD and DVBM (operating entities). Iven and VCI were under common control of our controlling shareholder. The transfer of ownership in Sino Pride from Iven to VCI is a part of the corporate restructuring to prepare the Company to list in the U.S. capital markets. The Company accounted for the September 2017 transaction as a transaction between entities under common control based on guidance provided by FASB ASC 805-50-25. Following the above transactions, VCI gained control over Sino Pride and its subsidiaries, and, as a result, VCM gained control over VCI, Sino Pride and its Subsidiaries. The Company together with its wholly-owned subsidiaries, VCI, Sino Pride and majority owned subsidiaries, DVBM and DVPM were effectively controlled by the same shareholder, Mr. Brown before and after the September 2017 corporate restructuring, and is considered under common control, which has been accounted for similar to the pooling method of accounting. The accompanying consolidated financial statements have been prepared as if the current corporate structure had been in existence at the beginning of the periods presented. Accordingly, the historical financial statements are those of Sino Pride and its Subsidiaries. Segment Information The Company and its subsidiaries generate most of the income from rental and building management services. The Company manages one shopping center currently. Geographically, all income is generated from Dalian, China. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 – GOING CONCERN The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As indicated in the accompanying condensed consolidated financial statements, the Company had a net loss of $1,656,371 and $5,850,810 for the three months ended June 30, 2020 and 2019, respectively; a net loss of $4,080,833 and $7,516,742 for the six months ended June 30, 2020 and 2019, respectively; and has accumulated deficit of $207,104,990 at June 30, 2020. The Company believes that if there is no additional investment or financing, the current cash balance available to the Company or its projected cash balance for the next 12 months will be insufficient to cover the required payments of the operating expenses arising from normal business operations and to meet the required payments of buy-backs and lease-backs if settled with the claims filed by the property owners during next 18 months from the issuance date of this report. In light of our current operating state, management cannot provide assurance that the Company will achieve profitable operations or become cash flow positive in a short period of time. Management believes that with its current capital resources, it will be very difficult to continue operating and maintaining its business for the next 12 months from the issuance date of this report. As of June 30, 2020, we had total outstanding loans payable to Harbin Bank (the “Bank”) of $65,880,302. As of the date of this report, we are in default of three loans with the Bank in the aggregate amount of approximately $7.5 million. These loans are secured by certain assets of the Company. The Company is currently in discussion with the Bank to convert the existing loans into a new loan and apply for an additional liquidity loan of RMB 50 million (collectively, the “Refinancing Loans”) and waive the penalty of late payment of related loan interest (“Penalty Waiver”). However, there is no assurance or certainty that such Refinancing Loans or Penalty Waiver will be approved by the Bank. In the event that the Bank rejects our Refinancing Loans and/or commence any legal proceeding against us, we may lose our collateralized assets which will cause a material adverse effect on our results of operations. Furthermore, if the collateral on those loans cannot satisfy our payment obligation, we may be forced to commence liquidation if we do not have sufficient liquidity or cannot raise sufficient funds at that time, if any at all. As of June 30, 2020, the Company had property financing agreements payable of $72,961,523, lease liabilities payable of $379,684, expired lease-back payables of $5,431,553, guaranteed rent payable of $278,435, and buy-back payables of $4,086,077. As of June 30, 2020, there were 579 lawsuits against the Company in Dalian City, China. Litigants claimed that the Company did not buy back the property pursuant to the sales contract or the Company did not pay the promised lease-back rent on time. These claims amounted to $24,580,425 (RMB 173,891,761 translated at June 30, 2020 exchange rate). These payables were included in and reported under the caption of “Property financing agreements payable”, “Lease liabilities” and “Other payables”. In connection with the progress of these cases, the Company accrued $4,666,944 for possible extra litigation charges. The Company records attorney fees when invoiced. These lawsuits are mostly caused by the failure of DVPD who fails to buy back the properties when requested to or to pay rents for certain lease-back stores. Subsequently, certain stores owned by DVPD have been frozen from transfer or disposition by the courts. DVPD has been prohibited from free transfer, disposal, and pledge of its equity interest in DVBM which accounts for 5% in DVBM from March 2, 2017 to March 1, 2019. The 5% equity interest in DVBM is still restricted currently as of the issuing date of this report. In addition, DVPD has been listed as a “dishonest debtor” by the local courts in the PRC. Once listed as a dishonest debtor, DVPD can be subject to certain restrictions in connection with commercial loans at the banks’ discretion; the purchase or transfer of properties and land use rights; and upgrade or renovation of properties. In addition, the bank accounts of DVPD are frozen by the courts which allow the inflow of cash to its bank accounts but prohibit the outflow of cash. The Company has been working actively to resolve these lawsuits since we acquired Sino Pride in November 2016. However, the Company cannot guarantee that all litigation cases can be solved in the future or no new litigation cases will be generated. Management believes that the recorded total property financing agreements payable, buy-backs payable, lease-back liabilities payable, guarantee rent payable, expired lease payable liabilities, and litigation payable of $87,804,216 is a reasonable estimation. In order to continue as a going concern, the Company will need, among other things, an additional capital injection and/or additional financing and the continued forbearance of its lender not to foreclose on their loans that are in default. Management’s plans to obtain such funds for the Company include (1) obtaining capital from the sale of its stock (2) short-term and long-term borrowings from banks and third-parties, and (3) short-term borrowings from stockholders or other related parties when needed. As a result of the coronavirus pandemic, our DVPD operations in Dalian were closed from January 25, 2020 until March 5, 2020, which has adversely affected our operating revenues and cash flow in the first quarter of 2020. Moreover, after reopening of the shopping mall, we have fewer shoppers and tenants in the shopping mall due to the continued effect of COVID-19 and we cannot predict the full extent to which the COVID-19 pandemic will impact our business or operating results, which is highly dependent on inherently uncertain future developments, including the severity of COVID-19 and actions taken by the PRC government and private businesses in relation to COVID-19 containment. Additionally, even if the Company does raise sufficient capital to support its operations, there can be no assurance that we could generate sufficient revenues to become profitable. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability and/or classification of the recorded asset amounts and or the classification of the liabilities that might be necessary should the Company is unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) filed with the Securities and Exchange Commission on May 29, 2020. In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the condensed consolidated financial statements for interim periods. The Company’s condensed consolidated financial statements include the accounts of VCM, VCI, Sino Pride, DVPD, DVBM, and DVPM. All inter-company accounts and transactions among the consolidation group have been eliminated in consolidation. Certain prior year balances have been reclassified to conform to current year’s presentation. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the consolidated financial statements and during the reporting periods. Actual results could materially differ from these estimates. Significant estimates include the liabilities recorded for financial agreements payable, buy-backs payable, lease back liabilities payable, expired lease payables and the estimated liability accrued for additional litigation charges related to the numerous lawsuits. Other estimates include the allowance for doubtful accounts on tenant receivables and other receivables, recoverability of long-lived assets, the useful life of rental properties, property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and the valuation of deferred tax assets. Foreign Currency Translation The reporting currency of the Company is the U.S. dollar. The functional currency of VCM and VCI is the U.S. dollar, the functional currency of DVPD, DVBM, and DVPM is the Chinese Renminbi (“RMB”), and the functional currency of Sino Pride is the Hong Kong Dollar (“HK$”). The condensed unaudited consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC 830-30 “Translation of Financial Statements”. The financial information is first prepared in RMB or HK$ and then is translated into the U.S. dollar at the period-end exchange rates as to assets and liabilities and at average exchange rates as to revenue, expenses and cash flows. Equity accounts are translated at their historical exchange rates when the capital transactions occurred. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into the U.S. dollar are included in accumulated other comprehensive income (loss). The cumulative translation adjustment and effect of exchange rate changes on cash for the periods ended June 30, 2020 and December 31, 2019 were $(55,938) and $(2,242,729), respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate prevailing at each balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Pursuant to paragraph 830-20-35-1, the intra-entity (intercompany transactions) foreign currency transactions whose terms are denominated in the currency other than the Company’s functional currency and settlement is anticipated in the foreseeable future (hence not long-term investment nature), the increases or decreases in expected functional currency cash flows are included in determining net income (loss) for the period in which the exchange rate changes. The Company has an inter-company loan denominated in US dollars. The repayment of the loan is required when the Company is profitable. The loan proceeds, repayment and accrued interest were tracked in US dollars. The Company uses the bank spot exchange rate to record proceeds and repayments in RMB. By the end of the reporting period, the Company will adjust loan and interest payable balances from US dollars to RMB by using the period ending exchange rate. Any gain or loss from foreign currency exchange will be recognized in the consolidated statements of operations. There were $90,381 foreign currency transaction gain for the three months ended June 30, 2020 and $524,372 loss for the three months ended 2019, and $367,986 loss for the six months ended June 30, 2020 and $18,358 gain for the six months ended 2019. Spot exchange rates and average exchange rates published by fxtop.com were used in the translation of the consolidated financial statements. For the three months ended June 30, For the six months ended June 30, US Exchange Rate 2020 2019 2020 2019 (unaudited) (unaudited) Period-end RMB 7.0744 6.8704 7.0744 6.8704 Average RMB 7.0891 6.8276 7.0335 6.7871 Period-end HK$ 7.7503 7.8090 7.7503 7.8090 Aaverage HK$ 7.7512 7.8400 7.7611 7.8432 All foreign exchange transactions must take place through authorized institutions of China. Management makes no representation that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. Revenue Recognition Rental Income Our Victory Plaza currently has 3,173 rental units. Among these rental properties, the Company owned 433 units, 814 units were sold but with buy-back options, and 1,926 units were sold with no repurchase options. The Company will lease back some of these sold properties and rent them out to tenants. All contracts include a lease and contain information on rental income and payment term. Rental income is reported in the gross amount including rent income from our owned properties and lease-back properties. A predominately majority of the rental income comes from our owned properties and a very limited portion, estimated at less than 3%, from the lease-back properties. Existing lease-back expenses were recorded as amortization and interest expenses. Expired lease-back expenses were included in the lease-back expenses. The Company recognizes the rental income on a straight-line basis over the terms of the leases. The cumulative differences between rental income recognized in the Company’s consolidated statements of operations and contractual payment terms have been recorded as deferred rental income and presented on the accompanying consolidated balance sheets. Property Management Fee Income We currently provide common area management services to all tenants and shop owners. Common area management services include security, cleaning, fire service, landscaping, public facilities maintenance and other traditional services provided by a property management office. The terms of the property management agreements are usually consistent with the tenants’ lease term. Property management fees are charged based on the area of property ranging from $16 to $19 per square foot per annum. Since the performance obligations in the property management agreement are identical with the terms of property management agreement, the Company recognizes the propriety management income on a straight-line basis over the terms of the management agreement. The cumulative differences between property management income recognized in the Company’s consolidated statements of operations and contractual payment terms have been recorded as deferred income and presented on the accompanying consolidated balance sheets. Expense Recovery The Company will pay utility, repair and insurance expenses to third party vendors in order to fulfill its management obligations. The Company will charge all or part of these expenses to tenants in addition to property management fees. The charge will depend on the size of tenant and terms of property management agreement. The Company is acting as an agent to arrange for the provision of utilities, repairs and other services by third parties. The Company will recognize the fees collected as income after the Company’s service is provided. The recovered expenses will offset the income the Company is paid and be reported net under the caption of other income in accompanying consolidated financial statements. Rental Properties Rental properties are carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvements of rental properties are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets. Improvements are capitalized and amortized over the shorter of their estimated useful lives or the terms of the respective leases, if any. When rental properties are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. The following table summarized the ownership of rental properties. % of Total Financial Statement Presentation Group Description of Property SQ Ft Assets Liabilities (Unaudited) A Owned with title by DVPD 16 % Rental properties N/A B Sold properties with buy- back options or return is in process without paying off 9 % Rental properties Property financing agreements payable C* Properties with buy- back options transferred to SML in 2017 and 2018 6 % Rental properties Loan payable SML D Sold properties 69 % N/A N/A Total properties 100 % Group A represents property that the Company owns 100%. Group B represents property we sold to individual owners with buy-back options which are pending. Group C represents property owned by SML, but the Company is still liable for the buy-back options. Pursuant to the SML Agreement, the Company is obligated to buy back these properties plus accrued interest no later than May 15, 2020. Group D presents property we sold to various individual owners without additional rights attached. Acknowledging the impact of COVID-19, on January 15, 2020, the Company amended its agreement with SML to extend the original repayment date from May 15, 2020 to May 15, 2023. Sold Rental Properties with Financing Agreements (Group B and C Properties) Pursuant to the sales contracts, the buyers’ obtained legal title to the property and also had an option to sign a separate buy-back agreement. The purchase agreement granted the buyer an option to request the Company to buy back sold properties at a stated buy-back price once the option is vested and the Company has received the payments for the sold property. As of June 30, 2020, approximately 15% of total rental spaces of Victory Plaza were sold to various unrelated individuals and entities with buy-back options. The majority of these properties were sold during the period from 1998 to 2014. The vesting dates of the buy-back options ranged from 2014 to 2018. Pursuant to FASB ASC 360-20-40-38, if a property seller has an obligation to repurchase the property, or the terms of the transaction allow the buyer to compel the seller or give an option to request the seller to repurchase the property, the transaction shall be accounted for as financing, lease, or profit-sharing arrangement rather than as a sale. It is aligned with FASB ASC 842-40-25-3, an option for the seller-lessee to repurchase the asset would preclude accounting for the transfer of the asset as a sale of the asset. The Company’s accounting policy is to treat this type of sales as a financing agreement. The Company continues to report its ownership of the property sold as an asset (within Rental Properties) and continues to depreciate the property based on the estimated useful lives. The Company recorded sales proceeds as “property financing agreements payable” in the consolidated financial statements and accrues the interest payable during the periods of the vesting. The interest rate is determined by the price spread of each unit’s sale price and buy-back price, and the time span from the date of sale to the maturity date (last date to execute the option). The Company will derecognize the liability when the Company purchases back the properties, or the owners of these properties have settled with the Company or gave up the buy-back options, or upon the expiration of the option if not exercised. If the settlement is greater than the book amount (including principal and interest), a loss will be recognized. If the amount of settlement is less than book amount (including principal and interest), a gain will be recognized. See Note 10, Property Financing Agreement Payable for further information. Sold Properties (Group D Properties) As of June 30, 2020, approximately 69% of the total space of Victory Plaza was sold and owned by various unrelated individuals and entities with legal title to the respective properties. Pursuant to the sale contracts, at the date of the sales, buyers obtained integrated legal ownership to the sold properties and assumed the significant risks and rewards of ownership of the property (had the ability to rent and sell the property at-will) while the Company received the payments of the purchase price. These sales are considered final sales. As part of our operations, the Company may from time to from lease back properties from the owners of Group D properties and subleases these properties to un-related third parties with new lease terms. As of June 30, 2020, there was no sublease from the owner of Group D properties. Sales and lease-back are two separate business transactions. Lease-back is at the owner’s will and is not a condition of sale. Lease-back could happen immediately after the sale of property or at any time after the sale if the owner of the property is interested in rental services provided by the Company. Under FASB ASC Topic 842, a sale and lease-back arrangement will be accounted for as a sale if all of the following conditions are met: (i) control of the underlying asset is transferred to the buyer-lessor in accordance with the revenue recognition guidelines in FASB ASC Topic 606, Revenue from Contracts with Customers, (ii) the classification of the sublease is not a finance lease from the perspective of the lessee, or a sales-type lease from the perspective of the lessor, and (iii) there is no repurchase option. All these lease-back arrangements met the above criteria and have been accounted for as a sale. The allocated net book value and land use rights were derecognized, and a gain or loss was recognized when each of the sales was completed. Lessee Accounting We have elected to early adopt FASB ASC Topic 842, the recent accounting update related to leases. FASB ASC 842 requires us to determine whether a contract is a lease or contains a lease at the inception of the contract, considering all relevant facts and circumstances. A contract is a lease or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee should include payments to be made in optional periods only if the lessee is reasonably certain to exercise its option to extend the lease or not exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. A lease is classified as a finance lease when the lease meets any of the following criteria: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease not classified as a finance lease is classified as an operating lease. The lease liability is initially measured at the present value of lease payments to be paid as of lease commencement. Lease payments should be discounted at the rate implicit in the lease or lessee’s incremental borrowing rate. The right-of-use asset is initially measured as: (i) the lease liability determined, (ii) lease payments made to the lessor at or before lease commencement, minus lease incentives received from the lessor, and (iii) initial direct costs incurred by the lessee. A lessee will measure the lease liability by (a) accreting interest expense on the carrying value of the lease liability using the effective interest rate method, and (b) reducing the carrying value of the lease liability for lease payments made. A lessee will measure the right-of-use asset by amortizing that asset over the lease term. Amortization is recorded on a straight-line basis. The right-of-use asset will also be tested for impairment based on the asset impairment rules that apply to property, plant and equipment in FASB ASC Topic 360. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying assets not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. Lessor Accounting The Company currently owns 433 rental units and leased these rental properties to various tenants. Pursuant to FASB ASC 842 – 30, the Company will classify a lease as a sales – type lease if: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of June 30, 2020, none of our leases, as a lessor, met the above criteria to be classified as a sales–type lease. Pursuant to FASB ASC 842 – 30, when none of the sales-type lease classification criteria are met, a lessor would classify the lease as a direct financing lease when both of the following criteria are met: (i) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all (90% or more) of the fair value of the underlying asset and (ii) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. As of June 30, 2020, none of our leases, as a lessor, met the above criteria to be classified as a financing lease. Pursuant to FASB ASC 842 – 30, a lessor would classify a lease as an operating lease when none of the sales-type lease or direct financing lease classification criteria are met. As of June 30, 2020, all leases of the Company’s rental properties were classified as operating leases. The Company will maintain the underlying asset and recognizes lease income on the straight line basis over the lease term. Disposition of Real Estate and Real Estate Investments Sales of real estate include operating properties and investments in real estate joint ventures. Gains from dispositions are recognized using the full accrual or partial sale methods, provided that the Company has met various criteria relating to the terms of sale and any subsequent involvement. If the criteria for sales recognition or gain recognition are not met because of a form of continuing involvement, the accounting for such transactions is dependent on the nature of the continuing involvement. In certain cases, a sale might not be recognized, and in others all or a portion of the gain might be deferred. Real Estate Held for Sale The Company generally considers assets to be held for sale when management believes that a sale is probable within a year. This generally occurs when a sales contract is executed with no substantive contingencies and the prospective buyer has significant funds at risk. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell. The Company evaluated its property portfolio and did not identify any properties that would meet the criteria for held for sale as of June 30, 2020 and December 31, 2019. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits in accounts maintained with commercial banks within the PRC, Hong Kong and United States. The Company considers all short-term highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. Restricted Cash Restricted cash represents cash deposits required by the bank to be used for interest and loan repayments only. Tenant and Sundry Receivables, net of Allowance for Doubtful Accounts Tenant receivables are recorded at original invoice amount, less an estimated allowance for doubtful accounts. The allowance for doubtful accounts represents management’s estimate of the amount of probable credit losses, determined by reviewing past due balances and other information. The Company makes judgments as to the collectability of tenant receivables based on historical trends and future expectations. Management estimates an allowance for doubtful accounts and adjusts gross tenant receivables downward based on their expectation of specific tenant risks and the Company’s tenant receivable aging and collection analysis. Management considers accounts past due on a tenant-by-tenant basis. Based on its review, management has provided an allowance for doubtful accounts as of June 30, 2020 and December 31, 2019 of $663,841 and $632,768, respectively. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation. Cost includes any incremental costs that are directly attributable to the construction or acquisition of the item of property and equipment. Maintenance and repairs are expensed as incurred, while major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. Depreciation is computed using the straight-line method over the estimated useful lives. When properties and equipment are sold or otherwise disposed of, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. Impairment of Long-Lived Assets Long-lived assets, primarily rental properties and machinery and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its estimated undiscounted future cash flows over the anticipated holding period and measures the impairment loss based on the amount by which the carrying amount of the asset exceeds its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values or third-party independent appraisals, as considered necessary. There were no impairment losses recognized during the three and six months ended June 30, 2020 and 2019. Debt Issuance Costs Costs related to bank loans payable consist of fees and direct costs incurred in obtaining such financings. These costs are presented as a reduction of bank loans payable and are amortized on a straight-line basis over the terms of the related loan payable which approximates the effective interest rate method. Such amortization is included in “Interest – loans” in the accompanying consolidated statements of operations, which amounted to $13,205 and $13,930 for the three months ended June 30, 2020 and 2019, respectively; $26,830 and $27,870 for the six months ended June 30, 2020 and 2019. Per Share Amounts The Company computes per share amounts in accordance with FASB ASC Topic 260 “Earnings per Share Noncontrolling Interest Noncontrolling interest is classified as a separate line item in the equity section and disclosures in the Company’s consolidated financial statements. This amount represents the 20% non-controlling interest in DVPD owned by DVDC. Comprehensive Income (Loss) The Company follows ASC 220-10, “Reporting Comprehensive Income” Fair Value of Financial Instruments The following disclosure of the estimated fair value of financial instruments is made in accordance with the provision of FASB ASC 825-10-65, “ Financial Instruments – Transition and Open Effective Date Information Income Taxes The Company is governed by the Income Tax Law of the PRC, the Special Region of Hong Kong and the U.S. Internal Revenue Code of 1986, as amended. The Company accounts for income taxes using the asset/liability method prescribed by FASB ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. Deferred tax assets are also provided for net operating loss carryforwards that can be used to offset taxable income in the future. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income or loss in the period that includes the enactment date. The Company follows the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarter or annual period based, in part, upon the results of operations for the given period. As of June 30, 2020 and December 31, 2019, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future. Fair Value Measurements The Company complies with the provisions of FASB ASC 820 “Fair Value Measurements and Disclosure ASC 820-10-35 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1 Inputs – Level 1 inputs are unadjusted quoted prices in active markets for assets or liabilities identical to those to be reported at fair value. An active market is a market in which transactions occur for the item to be fair valued with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Inputs – Level 2 inputs are inputs other than quoted prices included within level 1. Level 2 inputs are observable either directly or indirectly. These inputs include: (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active, such as when there are few transactions for the asset or liability, the prices are not current, price quotations vary substantially over time or in which little information is released publicly; (c) Inputs other than quoted prices that are observable for the asset or liability and (d) Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Inputs – Level 3 inputs are unobservable inputs for an asset or liability. These inputs should be used to determine fair value only when observable inputs are not available. Unobservable inputs should be developed based on the best information available in the circumstances, which might include internally generated data and assumptions being used to price the asset or liability. When determining the fair value measurements for assets or liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Company looks to active and observable markets to price identical assets. When identical assets are not traded in active markets, the Company looks to market observable data for similar assets. Nevertheless, certain assets are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement. Related Parties Parties are considered to be related to the Company if they, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its separate interests. The Company discloses all related party transactions. Deferred Rental Income Rental and management fee income from leases are recognized on a straight-line basis over the term of the relevant leases. The cumulative difference between the rental income/management fees recognized in the Company’s consolidated statements of operations and actual annual contractual lease payments are recorded as deferred rental income and presented on the consolidated balance sheets. Additionally, prepaid lease payments from the tenant is included in deferred income. Advertising Advertising is expe |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 6 Months Ended |
Jun. 30, 2020 | |
Prepaid Expenses And Other Assets | |
Prepaid Expenses and Other Assets | NOTE 4 – PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets consist of the following: June 30, December 31, 2020 2019 (Unaudited) Supplies on hands $ 83,641 $ 100,156 Prepaid expenses 293,991 331,454 Deposits 88,790 95,224 Total prepaid expenses and other assets $ 466,422 $ 526,834 |
Rental Properties, Net
Rental Properties, Net | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Rental Properties, Net | NOTE 5 – RENTAL PROPERTIES, NET Victory Plaza is located in Dalian City, Liaoning province of China. It was built by DVPD from 1993 to 1998. The Company leases its own properties and lease-backed properties to tenants and manages the Victory Plaza. The following table summarized ownership of rental properties. As of June 30, 2020 Group Description of Property Cost in In Square Feet % of Total Square Feet Unites (Unaudited) A Owned by DVPD $ 21,357,786 240,455 16 % 433 B Sold properties with buy- back options or return is in process without paying off 11,516,477 130,394 9 % 495 C Properties with buy- back options transferred to SML in 2017 and 2018 * 7,538,313 86,251 6 % 319 D Sold properties without buy- back options - 1,023,519 69 % 1,926 Rental properties at cost 40,412,576 1,480,619 100 % 3,173 Less: Accumulated depreciation (19,868,892 ) Rental properties, net $ 20,543,684 As of December 31, 2019 Group Description of Property Cost in In Square Feet % of Total Square Feet Unites A Owned by DVPD $ 21,704,162 240,455 16 % 433 B Sold properties with buy- back options or return is in process without paying off 11,703,248 130,394 9 % 495 C Properties with buy- back options transferred to SML in 2017 and 2018 * 7,660,568 86,251 6 % 319 D Sold properties without buy- back options - 1,023,519 69 % 1,926 Rental properties at cost 41,067,978 1,480,619 100 % 3,173 Less: Accumulated depreciation (19,733,963 ) Rental properties, net $ 21,334,015 * See Note 11, Property Financing Agreement Payable Depreciation expense for the rental properties was $220,943 and $233,070 for the three months ended June 30, 2020 and 2019 respectively, and $448,929 and $468,905 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, 1,023,519 square feet (95,088 square meters) of total rental properties (group D property), or 69% of rental properties were sold, which was the same as of December 31, 2019. These sold properties are owned by various unrelated individuals and entities. The majority of these properties were sold during the period from 1998 to 2012. Pursuant to the sale contracts, at the date of the sale, buyers obtained integrated legal ownership to the sold properties and assumed the significant risks and rewards of ownership of the property (had the ability to rent and sell the property at-will) while the Company received the payments of the purchase prices. These sales were considered final sales. The allocated carrying cost and land use rights costs were derecognized and gains or losses were recognized when the sales were completed. As of June 30, 2020, DVPD owned 240,455 square feet (22,339 square meters) of total rental properties (group A property) (approximately 16%) with legal title, which was the same as of December 31, 2019. Rental properties are carried at cost, which includes allocated construction costs and allocated original purchased land use right costs. These properties were recorded under the caption of “rental properties”. Among the properties owned by the Company, 200,747 square feet (18,650 square meters) of properties were used as collateral for a 390 million RMB Loan (approximately $54.9 million) and 22,098 square feet (2,053 square meters) were used as collateral for 50 million RMB Loan (approximately $7.0 million) and 23 million RMB Loan (approximately $3.2 million). (see Note 10, Bank Loans Payable) Group B and Group C properties were properties sold to various unrelated individuals and entities with a buy-back option. The majority of these properties were sold during the period from 1998 to 2012. The vesting dates of the buy-back options ranged from 2014 to 2018. The Company has no legal title to these properties until the Company purchases back these properties upon the exercise of the buy-back option. The Company’s accounting policy is to treat these types of sales as a financing agreement. The cost of property sold has been measured under the caption of “rental property” in the consolidated financial statements and continue to be depreciated. The Company recorded the sales proceeds as “property financing agreements payable” in the consolidated financial statements and accrues the interest expense during the period of the lease. The interest rate is determined by the price spread of each unit’s sale price and re-purchase price, and the time span from the date of sale to the maturity date (last date to execute the option). At the date of repurchase, the amount of sales proceeds received plus interest accrued will be equal to the agreed purchase price. The Company will derecognize the liability at the earlier of (1) when the Company repurchases the property, (2) when the owner of the property and the Company reaches a settlement and the owner gives up the buy-back option, or (3) the expiration of the buy-back option. (See Note 10), Property Financing Agreement Payable for further information. As of June 30, 2020, group B properties had 130,394 square feet (12,114 square meters), or 9% of total properties, which was the same as of December 31, 2019. Pursuant to the SML financing agreement (see Note 10, Property Financing Agreement Payable), SML will negotiate with each individual property owner who exercised their option to request the Company to buy back the property on a case by case basis and pay an agreed upon price to the property owner. SML will acquire the title to the property and settle with the previous owner and extend the buy-back option to May 15, 2023. The Company will honor the buy-back agreements and agreed to pay the same purchase price stated in the original buy-back agreements. SML will also negotiate with lease back owners and settle the balance due that the Company owed to lease owners. The Company will pay interest at 8% per annum of the balance (buy-back price) owed to SML. As of June 30, 2020 and December 31, 2019, 86,251 square feet (8,013 square meters) of properties were owned by SML. There is no private ownership of land in the PRC. All land in the PRC is owned by the government and cannot be sold to any individual or company. The government grants a land use right that permits the holder of the land a right to use the land for a specified period. Our land use rights were granted with a term of 50 years. Any transfer of the land use right requires government approval. The acquisition cost of the land use right was allocated to each rental property and is amortized with the rental property. The land use rights expire in May 2043. Properties’ estimated life was determined by the valid life of land use rights. Rental properties are depreciated over 45 years. Expected future minimum rents to be received over the next few years from leases in effect as of June 30, 2020 are as follows: For the Twelve Months Ending June 30, Amount (Unaudited) 2021 $ 75,318 2022 78,255 2023 29,839 Total $ 183,412 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 6 –PROPERTY AND EQUIPMENT Property and equipment are composed of the following: Estimated June 30, 2020 December 31, 2019 (Unaudited) Rental property 45 years $ 214,995 $ 218,482 Office equipment 3-5 years 315,449 319,359 Business machinery and equipment 5-10 years 2,897,610 2,944,603 Auto 5 years 24,182 24,574 Improvements 5-10 years 9,838,276 9,997,516 Total properties, machinery and equipment 13,290,512 13,504,534 Less: accumulated depreciation and amortization (12,951,499 ) (13,074,471 ) Property and equipment, net $ 339,013 $ 430,063 Depreciation expense was $39,184 and $56,756 for the three months ended June 30, 2020 and 2019, respectively; $84,341 and $113,426 for the six months ended June 30, 2020 and 2019, respectively. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | NOTE 7 - INTANGIBLE ASSETS Intangible assets consist of the software used in property management, which has a 5-year estimated useful life. The cost and related amortization are as follows: Property Management Software June 30, December 31, (Unaudited) Cost $ 25,408 25,819 Less: accumulated depreciation (10,489 ) (8,179 ) Intangible assets, net $ 14,919 17,640 Amortization expense was $1,236 and $1,316 for the three months ended June 30, 2020 and 2019, respectively, $2,436 and $2,648 for the six months ended June 30, 2020 and 2019, respectively. |
Right of Use Assets
Right of Use Assets | 6 Months Ended |
Jun. 30, 2020 | |
Right Of Use Assets | |
Right of Use Assets | NOTE 8 – RIGHT OF USE ASSETS As part of its operations, the Company leases back sold properties in Victory Plaza and subleases the properties to un-related third parties with separate lease terms. Leases related to the property in Group B (see Note 5, Rental Properties, Net) which were sold with buy-back options are classified as financing leases. Leases related to the property in Group D (see Note 5) are classified as financing leases if the lease meets any of the following criteria: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) The lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease will be classified as an operating lease if it is not classified as a finance lease. Due to the impact of the coronavirus pandemics, the Company has moved out of its New York office located in 424 Madison Avenue, New York, NY (the “Premise”) on February 28 2020. The lease between the landlord (the “Landlord”) and the Company, dated June 12, 2019 (the “Lease”), was to expire on August 31, 2022. On February 28, 2020, the Company entered into a surrender agreement with the Landlord to surrender possession of the premises prior to the natural expiration of the Lease term (the “Surrender Agreement”), pursuant to which, the Company shall remain liable for all obligations under the Lease until the Landlord re-rents the Premises, which the Landlord will attempt to do, in good faith. The Company also represents that the Landlord may draw down on the security deposit, which totals $85,215, to cover the rent, damages, and any other expenses. Judging by the current market condition in New York City and the ongoing stay-at-home order issued by the local government, the Company believes that the Landlord may not be able to re-rent the Premises and in such event, the Company will be liable for the remaining rent from March 1, 2020 to August 31, 2022, in an estimated amount of $425,000 On March 27, 2018, Sino Pride leased office space which expired on March 26, 2020. Due to the cost consideration, on August 15, 2019, Sino Pride terminated its old lease and moved to a new location. The lease is classified as an operating lease. At the lease commencement date, the Company recognized a right-of-use asset and a lease liability, which is the present value of the total lease payments discounted at 5.25% - a premium bank lending rate per annum at the date. The right-of-use asset is amortized over the term of lease. On March 4, 2020, Sino Pride terminated the lease. As of June 30, 2020, Sino Pride maintains no lease agreement in HK. Lease Liability maturities as of June 30, (Unaudited) 2021 $ 176,516 2022 171,741 2023 31,427 Total Lease Liability maturities $ 379,684 Right of use (“ROU”) assets consist of the followings as of June 30, 2020 and December 31, 2019: Right of Use Assets as of June 30, 2020 Lease Type Property Group Lease ROU Accumulated Depreciation ROU, (Unaudited) Operating lease - Rental - 1 $ 491,853 $ (143,405 ) $ 348,448 Total 1 $ 491,853 $ (143,405 ) $ 348,448 Right of Use Assets as of December 31, 2019 Lease Type Property Group Lease ROU Accumulated Depreciation ROU, Financing lease B 1 $ 61,261 $ (60,166 ) $ 1,095 Operating lease - Rental - 2 564,865 (81,782 ) 483,083 Total 3 $ 626,126 $ (141,948 ) $ 484,178 There were 0 and 6 lease-back leases that expired during the six months ended June 30, 2020 and the year ended December 31, 2019, respectively. The Company did not renew those leases. Amortization of financing leases was $0 and $27,685 for the three months ended June 30, 2020 and 2019, respectively; $0 and $42,366 for the six months ended June 30, 2020 and 2019, respectively. Lease expense was $47,122 and $139,956 for the three months ended June 30, 2020 and 2019, respectively; $120,122 and $322,475 for the six months ended June 30, 2020 and 2019, respectively. The short-term rental lease expense included in lease expense was $10,749 and $44,214 for the three months ended June 30, 2020 and 2019, respectively; $31,110 and $141,169 for the six months ended June 30, 2020 and 2019, respectively. |
Loan and Interest Receivable
Loan and Interest Receivable | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Loan and Interest Receivable | NOTE 9 – LOAN AND INTEREST RECEIVABLE On June 28, 2018, DVBM entered into a loan agreement to lend RMB 50,000,000 (or approximately $7.2 million) (the “Principal”) to Zhong Ke Chuang Zhan Investment, Ltd (“ZKCZ”), one of the Company’s strategic partners. The maturity date of the unsecured loan was June 30, 2019 (the “Maturity Date”). The interest (the “Interest”) accrued on the unpaid Principal amount of the loan from July 1, 2018 to September 30, 2018 was at 2% per month and from October 1, 2018 to June 30, 2019 was at 0.7% per month. All computations of the Interest rate were based on the daily balance of the Principal amount of the loan. Accrued, but unpaid, interest was to be paid on the Maturity Date. On June 30, 2019, the Company signed a new loan agreement with ZKCZ to amend the loan amount from RMB 50,000,000 to RMB 75,000,000 (or $10.8 million) and extended the Maturity Date to September 30, 2020. At the request of the Company, ZKCZ has provided the Company a Promissory Note and payment plan related to the outstanding loan. Due to the impact of COVID-19, on July 27, 2020, the Company amended its agreement with ZKCZ to extend the original repayment date from September 30, 2020 to September 30, 2021. From January 1, 2020 to June 30, 2020, ZKCZ has made payments of approximately RMB 14,000,000 or $1,972,000 back to the Company. The outstanding loan principal and accrued interest from ZKCZ was approximately $3.1 million and $1.2 million, respectively, at June 30, 2020. As of June 30, 2020, the Company has recorded a reserve allowance of RMB18,144,100 or $2,864,755 in the accompanying unaudited condensed consolidated financial statements. |
Bank Loans Payable
Bank Loans Payable | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Bank Loans Payable | NOTE 10 – BANK LOANS PAYABLE The following table sets forth the Company’s loans payable as of June 30, 2020 and December 31, 2019: June 30, December 31, Harbin Bank Loans 2020 2019 (Unaudited) Interest at 5.88 per annum, payable 07/18/2027 $ 54,633,609 $ 55,519,644 Interest at 5.88 per annum, payable 07/19/2024 4,038,706 4,104,206 Interest at 6.50% per annum, payable 12/20/2018-In default 3,251,158 3,303,885 Interest at 6.50% per annum, payable 09/27/2019-In default 2,812,959 2,858,579 Interest at 6.50% per annum, payable 03/11/2020-In default 1,447,474 1,470,948 Paycheck Protection Program (“PPP”) Loan 114,970 - Total Principal 66,298,876 67,257,262 Less: unamortized debt issuance cost (303,604 ) (335,849 ) Total Bank Loans Payable, net $ 65,995,272 $ 66,921,413 On July 20, 2014, the Company’s subsidiaries, DVPD entered into a 10-year loan agreement (the “RMB 390 million Loan”) $55,128,350 (RMB 390,000,000 translated at June 30, 2020 exchange rate) long-term borrowing from Harbin Bank (the “Bank”). The loan was used for “repayment of other bank loans, repayment of shareholder loans and renovations”. The loan charges a floating rate of interest at 120% of the loan rate published by the People’s Bank of China for similar loans. Current benchmark rate for a business loan over 5 years is 4.9% per annum adjusted on October 24, 2015. The average interest rates were 5.91% and 5.88% for the three-month periods ended June 30, 2020 and 2019, respectively. Originally, the loan was to mature on June 19, 2024. On August 17, 2017, the Bank agreed to the following: (i) to extend the maturity date of the Loan from July 19, 2024 to July 18, 2027; (ii) to extend the initial monthly repayment date from August 20, 2017 to July 20, 2020, however, during the extended period, the Company has to repay principal of $70,677 (RMB 500,000) per quarter plus monthly interest; and (iii) add Mr. Alex Brown, the controlling shareholder and founder of VCI, as a joint and several guarantor. The loan agreement includes customary events of default, including DVPD’s failure to pay any principal or interest when due, becoming insolvent, or ceasing operations, or if there is a material adverse change in the assets, business, commitments, or prospects of DVPD. Upon the Bank’s declaration of an event of default under the Loan agreement, the Bank can demand payment in full of all outstanding principal and accrued interest. The RMB 390 million Loan balance was $54,633,609 (RMB 386,500,000 translated at June 30, 2020 exchange rate) and $55,519,644 (RMB 386,500,000 translated at December 31, 2019 exchange rate) as of June 30, 2020 and December 31, 2019, respectively. The loan is secured substantially by 18,650 square meters (200,747 square feet) of rental properties owned by DVPD and guaranteed jointly by Sino Pride, DVPD, DVBM, and Mr. Alex Brown. If DVPD fails to fulfill the obligations of the relevant provisions of the RMB 390 million Loan agreement, each guarantor shall be liable and pay liquidated damages to the Bank. The damages are 20% of the principal amount of the loan. According to the loan agreement with the Bank dated August 17, 2017, the Company had paid to the Bank the quarterly principal plus monthly interest through the first quarter of 2019. The Company, however, has not made such payment since April 2019, which can be considered as an event of default. As of June 30, 2020, accrued quarterly principal and interest totaled approximately $4.6 million (the “RMB 390 million Loan Balance Due”). On March 24, 2015, DVPD entered into a loan agreement (the “RMB 50 million Loan”) for a $7,067,737 (RMB 50,000,000 translated at June 30, 2020 exchange rate) long-term borrowing from the Bank. The RMB 50 million Loan was used for renovations. The RMB 50 million Loan charges a floating rate of interest at 120% of the loan rate published by the People’s Bank of China. The current benchmark rate for a business loan over 5 years is 4.9% per annum adjusted on October 24, 2015. The average interest rates for the three-month periods ended June 30, 2020 and 2019 were 5.88% and 5.92%, respectively. The maturity date of the RMB 50 million Loan is July 19, 2024. The RMB 50 million Loan agreement includes customary events of default, including DVPD’s failure to pay any principal or interest when due, becoming insolvent, or ceasing operations, or if there is a material adverse change in the assets, business, commitments, or prospects of DVPD. Upon the Bank’s declaration of an event of default under the loan agreement, the Bank Loan can demand payment in full of all outstanding principal and accrued interest. The RMB 50 million Loan balance was $4,038,706 (RMB 28,571,429 translated at June 30, 2020 exchange rate) and $4,104,206 (RMB 28,571,429 translated at December 31, 2019 exchange rate) at June 30, 2020 and December 31, 2019, respectively. The RMB 50 million Loan is secured substantially by 2,053 square meters (22,098 square feet) of rental properties owned by DVPD and guaranteed jointly by Sino Pride, DVPD and DVBM. If DVPD fails to fulfill the obligations of the relevant provisions of the Loan agreement, each guarantor shall be liable and pay liquidated damages to the Bank. The damages are 20% of the principal amount of the loan. The Company is required to make the principal and interest payments from April 20, 2015 through the Maturity Date. The Company, however, has not made such payment since April 2019, which can be considered as an event of default. As of June 30, 2020, the accrued principal and interest totaled approximately $1.2 million (the “RMB 50 million Loan Balance Due”). On December 21, 2017, DVPD entered into a liquidity loan agreement (the “RMB 23 million Loan”) for a principal amount of $3,251,159 (RMB 23,000,000 translated at June 30, 2020 exchange rate) from Harbin Bank (the “Bank”) with interest at 6.5%, payable monthly. The RMB 23 million Loan is used for short term liquidity needs. On December 28, 2017, DVPD borrowed $1,696,257 (RMB 12,000,000 translated at June 30, 2020 exchange rate). The term of the loan was one year and was due on December 20, 2018. On January 19, 2018, DVPD borrowed an additional $1,554,902 (RMB 11,000,000 translated at June 30, 2020 exchange rate). DVPD may choose to extend the term of the loan after obtaining prior written consent from the Bank at least 15 days prior to the maturity date. Currently. The loan agreement includes customary events of default, including DVPD’s failure to pay any principal or interest when due, becoming insolvent, or ceasing operations, or if there is a material adverse change in the assets, business, commitments, or prospects of DVPD. Upon the bank’s declaration of an event of default under the loan agreement, the Bank can demand repayment in full of principal and accrued interest. The Loan also prohibits the payment of dividends. The RMB 23 million loan is secured by the same collateral as the RMB 50 million loan and is guaranteed jointly by DVBM and Sino Pride. As the date of this Quarterly Report, the Company has not made the repayment and the loan is in default. On September 27, 2018, DVPD borrowed $2,812,959 (RMB 19,900,000 translated at June 30, 2020 exchange rate) in a short-term loan from Harbin Bank (the “RMB 19.9 million Loan”). The loan requires interest at 6.50% per annum and expired on September 12, 2019. The use of loan proceeds is restricted to pay principal and interest amounts owed to Harbin Bank. As of the date of this Quarterly Report, the Company has not made the repayment and the loan is in default. On March 26, 2019, DVPD borrowed $1,447,473 (RMB 10,240,000 translated at June 30, 2020 exchange rate) in a short-term loan from Harbin Bank (the “RMB 10.24 million Loan”, together with the RMB 23 million Loan and RMB 19.9 million Loan, the “Liquidity Loan Balance Due”). The loan requires interest at 6.50% per annum and expires on March 11, 2020. The use of loan proceeds is restricted to pay principal and interest amounts owed to Harbin Bank. As of the date of this Quarterly Report, the RMB 10.24 million Loan has been expired while the Company has not made the corresponding repayment. As of the date of this Quarterly Report, the RMB 23 million Loan, RMB 19. 9M Loan, and RMB 10.24 million Loan have become due since the Company has not made the corresponding payment. The weighted average interest rate for these loans was 6.50% per annum for the three months ended June 30, 2020 and 2019. For the three months ended June 30, 2020 and 2019, interest expense incurred for the above loans, including amortization of debt issuance costs amounted to $988,295 and $1,055,274, respectively; $2,010,258 and $2,098,494 for six months ended June 30, 2020 and 2019, respectively. The Bank and the Company are currently discussing potential refinancing to convert the principal and interests due, including the RMB 390 million Loan Balance Due, the RMB 50 million Loan Balance Due, and the Liquidity Loan Balance Due into a new loan and an additional liquidity loan in the amount of RMB 50 million (collectively, the “Refinancing Loans”). The collateral for the potential RMB 50 million loan will be the remaining values of same collateral for the RMB 390 million Loan and RMB 50 million Loan but ranking junior to the RMB 390 million Loan and RMB 50 million Loan. In addition, the Company has been negotiating with the Bank for a waiver of the penalty for late payment of related loan interest (the “Penalty Waiver”). The Company has already submitted the application for the Refinancing Loans and request for the Penalty Waiver to the Bank and is awaiting the Bank’s approval. However, there is no assurance that such Refinancing Loans or Penalty Waiver will be approved by the Bank. As of the date of this Quarterly Report, the Company is not aware that the Bank has declared an event of default or taken any legal action against it for defaulting on the RMB 23 million Loan, RMB 19.9 million Loan and RMB 10.24 million Loan. In the event that the Bank rejects its Refinancing Loan application and/or commences legal proceeding against it regarding the loans that are in default, the Company would have to pay a penalty of approximately $757,000 to the Bank. In addition, the Company may lose its collateralized assets which will cause a material adverse effect on its results of operations. Furthermore, if the collateral on those loans cannot satisfy its payment obligation, the Company may be forced to commence liquidation process if it does not have sufficient liquidity or cannot raise sufficient fund at that time, if any at all. Debt Maturities As of June 30, 2020, scheduled maturities of the Company’s outstanding bank loans were as follows: Twelve months ending June 30, (Unaudited) 2021 $ 7,104,086 2022 1,036,968 2023 1,036,968 2024 1,036,968 2025 1,036,967 Thereafter 54,919,949 Total debt maturities 66,183,906 Less: unamortized debt issuance costs (303,604 ) Plus: PPP loan 114,970 Total debt obligations $ 65,995,272 |
Property Financing Agreements P
Property Financing Agreements Payable | 6 Months Ended |
Jun. 30, 2020 | |
Property Financing Agreements Payable | |
Property Financing Agreements Payable | NOTE 11 – PROPERTY FINANCING AGREEMENTS PAYABLE Property financing agreements payable consists of the following as of June 30, 2020 and December 31, 2019. June 30, December 31, (Unaudited) Buy-back financing agreements - Group B properties $ 42,010,214 $ 42,680,410 SML financing agreements - group C properties * 30,951,309 34,802,880 Less: unamortized SML financing cost (18,509 ) Total property financing agreements, net $ 72,961,523 $ 77,464,781 * includes amount of lease-back payables transferred to SML plus accrued interest Buy-back Financing Agreements As of June 30, 2020, 216,230 square feet (20,127 square meters) of total properties (15%), which are included Group B and Group C properties-the properties transferred to SML) were sold to various unrelated individuals and entities with a buy-back option. The majority of these properties were sold in the period from 1998 to 2012. The date of buy-back options ranged from 2014 to 2018. The Company’s accounting policy is to treat these types of sales as financing agreements. The costs of properties sold were kept under the caption of “rental properties” in the consolidated financial statements and continue to depreciate the properties over their estimated life. (see Note 5, Rental Properties, Net) The Company recorded sales proceeds as “property financing agreements payable” in the consolidated financial statements and accrues interest during the period of the buy-back option. The interest rate is determined by the price spread of each unit’s sale price and buy-back price, and the time span from the date of sale to the expiration date (last date to execute the option). In the case where the buy-back price is equal to the sales price, a bank long term lending rate is used. The amount of buy-back financing agreements represents the original proceeds from the sale of the property plus accrued interest. At the date of expiration, the amount of the buy-back financing agreements will equal the buy-back price stated in the buy-back contract. Detailed information on property buy-back financing agreements payable in group B as of June 30, 2020 and December 31, 2019 as follows. Units Square Feet Selling Price Buy-Back Price Property Financing Agreements Payable (Unaudited) June 30, 2020 Effective agreements 4 1,625 $ 444,757 $ 605,606 $ 588,856 Past due agreements 491 128,769 36,753,479 41,423,208 41,421,358 Total financing agreements 495 130,394 $ 37,198,236 $ 42,028,814 $ 42,010,214 December 31, 2019 Effective agreements 5 1,948 $ 533,965 $ 713,740 $ 686,960 Past due agreements 490 128,446 37,267,543 41,996,688 41,993,450 Total financing agreements 495 130,394 $ 37,801,508 $ 42,710,428 $ 42,680,410 The buy-back price is the price that Company has to pay when the owner of property exercises their option to have the Company buy-back the property. This price is stated in the buy-back agreement. Property financing agreements payable is the amount that the Company accrued as a liability as of the reporting date. At the date of maturity, property financing agreements payable will equal the buy-back price. As of June 30, 2020, the Company paid a total of $3,474,503 (RMB 24,197, 759) to the owners of property, which was recorded as a reduction of the Property Financing Agreement Payable in the accompanying consolidated financial statements. Property financing agreements payable will be derecognized when the buy-back amount is fully paid. In the case of settlement, the remaining unpaid balance will be reclassified from buy-back payable to other payables. The amount recorded as buy-back payables reclassified to other payables was $4,086,077 and $4,152,344 as of June 30, 2020 and December 31, 2019, respectively. Following table set forth the expiration of buy-back options (Group B properties) and the buy-back amount. Future Expiration Units Buy-Back Amount (Unaudited) Past due as of 06/302020 491 $ 41,423,208 6/30/2021 2 356,483 6/30/2022 2 249,123 Total 495 $ 42,028,814 SML Agreement On December 29, 2017, the Company entered into an agreement “Strategy Cooperation Agreement”, as amended on February 22, 2018 (the “SML Agreement”) with Dalian Sheng Ma Lin Trading Ltd. (“SML”). Pursuant to the SML Agreement, SML will negotiate with each individual property owner who exercised their option to request the Company to buy back the property on a case by case basis and pay an agreed price to such owner. SML will subsequently become the owner of the property and the Company had agreed to buy back the property at the initial price under the buy-back option with the previous owner no later than May 15, 2020. The Company also agreed to pay interest of 8% per annum commencing on January 1, 2018. In addition, SML will settle the lease-back payables under the lease-back agreements with each individual property owner and the Company agrees to pay SML the amount of rent payable under the lease-back plus annual interest of 8% commencing on January 1, 2018 no later than May 15, 2020. The SML Agreement helped the Company to temporarily relieve part of pressure from disputes and expedite the settlements which will help Company to improve its credit and financial position so that the Company can focus on the Renovation. However, as of December 31, 2019, the Company has temporarily suspected the renovation projects due to its inability to raise the needed fund. SML has no relationship or affiliation with the Company other than the SML agreement. As of June 30, 2020, the properties with buy-back options totaled 319 units, 86,251 square feet (8,013 meters). From January 1, 2020 to June 30, 2020, the Company paid a total of RMB 30,961,059 ($4,376,492) to SML, which was recorded as a reduction of the Property Financing Agreement Payable in the accompanying consolidated financial statements. Acknowledging the impact of the outbreak of COVID-19, on January 15, 2020, the Company entered into a supplemental agreement with SML to extend the original repayment date from May 15, 2020 to May 15, 2023. Amounts under the SML Agreement as of June 30, 2020 and December 31, 2019 consist of following: June 30, December 31, (Unaudited) Buy-back related cases: including historical buy-back remaining balance $ 21,080,325 $ 25,869,672 Lease-back related cases: including historical lease-back payable remaining balance 3,956,001 4,020,158 Accrued interest payable to SML 5,914,983 4,913,051 Total SML financing agreements $ 30,951,309 $ 34,802,881 |
Account Payable and Accrued Lia
Account Payable and Accrued Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Account Payable and Accrued Liabilities | NOTE 12 – Account Payable and accrued liabilities Accounts payable and accrued liabilities consist of the following: June 30, December 31, (Unaudited) Accounts payable $ 4,505,552 $ 3,461,758 Wages and employee benefits payable 599,078 679,189 Taxes payable* 1,035,621 806,380 VAT payable 910,684 745,935 Bank loan interest payable 5,181,432 3,245,679 Total accounts payable and accrued liabilities $ 12,232,367 $ 8,938,941 * Taxes payable consist of the following: June 30, December 31, (Unaudited) Individual income taxes $ 24,608 $ 27,150 Business taxes 187,825 169,336 Property and land use taxes 383,441 269,646 Tax penalties 336,643 247,732 Other surcharge and fees 103,104 92,516 Total $ 1,035,621 $ 806,380 As of June 30, 2020 and December 31, 2019, the Company’s taxes payable includes property tax, land use right taxes, income tax, taxes related to rental and other taxes in the aggregate amount of $1,035,621 and $806,380, respectively. In accordance with Chinese tax authorities and tax laws, the Company accrued tax penalties payable of $336,643 and $247,732 as of June 30, 2020 and December 31, 2019, respectively. |
Lease Liabilities
Lease Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Lease Liabilities | NOTE 13 – LEASE LIABILITIES Leases liabilities consisted of following as of June 30, 2020. Lease Type Property Group Lease Units Lease Payable (Unaudited) Financing leases D 2 17,768 Operating lease Office rent 1 361,916 Total 3 $ 379,684 Leases liabilities consisted of following as of December 31, 2019. Lease Type Property Group Lease Units Lease Payable Financing leases B 1 $ 1,637 Financing leases D 2 21,118 Operating lease Office rent 2 498,509 Total 5 $ 521,264 For the six months ended June 30, 2020, no lease-back leases expired. For the year ended December 31, 2019, 5 lease-back leases expired. The Company did not renew those leases. The unpaid lease liability was recorded as “Other payables” in the accompanying consolidated financial statements. Accumulated unpaid lease-back liabilities were $5,431,553 and $5,529,680 as of June 30, 2020 and December 31, 2019, respectively. For the financing leases, the Company did not process any cash payments for the six months ended June 30, 2020 and December 31, 2019 respectively. During the same periods, their respective weighted average remaining lease term was about one year whereas the lease liabilities resulting from right-to-use assets were $17,768 and $22,755. For the operating leases, the expense was $49,996 and $78,517 for the three-months periods ended June 30, 2020 and 2019, respectively; $92,537 and $156,972 for the six months ended June 30, 2020 and 2019, respectively. During the same periods, their respective weighted average remaining lease terms were about one year whereas the supplemental noncash on lease liabilities resulting from right-to-use assets were $361,916 and $498,509. A typical lease contract will include the: (i) the lease period – usually around 10 years, (ii) agreed lease payment amount, (iii) payment terms among others, The Company takes the risk after the lease is signed. The Company is liable for the agreed lease-back payment amount even if the property is vacant. Lease-back rental properties may be combined with Company owned properties together for rent depending on the needs of the tenant. The Company did not trace income separately from those lease-back properties. Rental income is reported gross including rental income from our owned properties and lease-back properties. Lease-back expenses were recorded as amortization, interest and lease-back expenses separately. Lease expenses from financing and operating lease consisted of (i) amortization of the ROU asset; (ii) interest expense of the lease liability and (iii) other one-time payments due to settlement or late-payment reimbursement; (iv) lease-back expenses; and (v) rental expenses from the short-term leases. The Company incurred $0 and $27,685 of amortization of ROU assets for the three-month periods ended June 30, 2020 and 2019, respectively; $0 and $42,366 for the six months period ended June 30, 2020 and 2019, respectively. The Company incurred $0 and $1,170 of interest expense in connection with financing leases for the three-month periods ended June 30, 2020 and 2019, respectively; $0 and $1,973 for the six-month periods ended June 30, 2020 and 2019, respectively. Rental expense for the short-term leases was $10,749 and $44,214 for the three-month periods ended June 30, 2020 and 2019, respectively; $31,110 and $141,169 for the six months ended June 30, 2020 and 2019, respectively. Total lease expense was $47,122 and $139,956 for the three-month periods ended June 30, 2020 and 2019, respectively; $120,122 and $322,475 for the six-month periods ended June 30, 2020 and 2019, respectively. Future minimum lease-back payables at June 30, 2020 were as follows: For the t welve months ending Lease Units* Square Feet Minimum Lease Payable (Unaudited) June 30, 2021 1 108 $ 438 June 30, 2022 - - - Total future minimum lease payable $ 438 * Lease units represent total leases during the periods New York’s office lease expires on August 31, 2022. The future minimum rental payments are as follows: For the twelve months ending (Unaudited) June 30, 2021 $ 158,748 June 30, 2022 171,741 June 30, 2023 31,427 Total $ 361,916 |
Other Payables
Other Payables | 6 Months Ended |
Jun. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Payables | NOTE 14 – OTHER PAYABLES Other payables consist of the following: June 30, December 31, 2020 2019 (Unaudited) Tenant deposits payable 2,390,284 2,624,528 Tenants escrow account 1,735,159 1,694,568 Guaranteed rent payable 278,435 282,950 Expired lease-back payable 5,431,553 5,529,680 Buy-back payable 4,086,077 4,152,344 Accrued liabilities for additional payable from litigation 4,666,945 4,742,632 Union, housing, heating and others 1,006,303 879,996 Total Other Payables $ 19,594,756 $ 19,906,698 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 15 – RELATED PARTY TRANSACTIONS The Company has been financing its operations by borrowing funds from Sino Pride and DVDC, the holder of the 20% non-controlling equity interest of DVPD. Loan payable to related party consists of following as of June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 (Unaudited) Loan payable to DVDC $ 10,425,760 $ 10,594,843 Due to related individual including major shareholder 1,956,818 1,339,948 Loan payable to related parties $ 12,382,578 $ 11,934,791 Loan Payable to DVDC DVDC contributed land use rights and infrastructures valued at $20,000,000 to DVPD. Among this $20,000,000 contribution, $6,800,000 was recorded as registered capital, $13,200,000 was recorded as a loan payable to DVDC per the December 25, 2000 agreement. The loan is payable when DVPD is profitable. Loan principal $3,300,000 (25% of $13,200,000) bears interest at 8% per annum. The interest rate for the remaining balance of principal is equal to the loan rate published by Bank of China. Loan payable to DVDC was initiated in US dollars and related interest calculations are based on the principal in US dollars per the loan agreement. However, the loan agreement did not specify which currency will be used when the loan is repaid. Considering that DVDC is a Chinese entity and located in China, loan and interest payments must be denominated in RMB, therefore, RMB is the currency utilized to record the principal and interest payable. Any gain or loss resulting the translation of the financial statements will be recorded in “accumulated comprehensive income (loss)” section. RMB 109,356,000 loan payable to DVDC was translated from $13,200,000 US dollars at the historical rate. Loan payable to DVDC consists of following at June 30, 2020 and December 31, 2019. June 30, 2020 December 31, 2019 (Unaudited) Loan principal $ 13,200,000 $ 13,200,000 Advance payments for infrastructure construction (5,685,747 ) (5,685,747 ) Other payable to DVDC 215,136 215,136 Net loan payable to DVDC 7,729,389 7,729,389 Foreign exchange effect 2,696,371 2,865,454 Net loan payable to DVDC $ 10,425,760 $ 10,594,843 Accrued interest expense – related parties was $132,063 and $134,149 for the three months ended June 30, 2020 and 2019, respectively; $266,197 and $268,376 for the six months ended June 30, 2020 and 2019. Total accrued interest payable to related parties was $11,603,503 and $11,520,609 at June 30, 2020 and December 31, 2019, respectively. Due to Related Individual The spouse of our major shareholder provided working capital for our US office expenses. As of June 30, 2020, and December 31, 2019, the amount due to this individual was $1,956,818 and $1,339,948, respectively. The amount due earns no interest and is due on demand. Loan Payable to Sino Pride Sino Pride has been major source of fund for the operations of DVPD and DVBM. In the period from 1996 to 2008, DVPD received loans of $38,683,297 from Sino Pride and repaid $20,710,919 in the period from 1998 to 2014. In 2015, total repayments were $4,068,630. Loan payable to Sino Pride bears interest at 8% per annum. Pursuant to FASB ASC 830-20-35-1, the intra-entity (intercompany transactions) foreign currency transactions whose terms are denominated in the currency other than the entity’s functional currency and settlement is anticipated in the foreseeable future (hence not long-term investment nature), requires the increases or decreases in expected functional currency cash flows to be included in determining income (loss) in the periods as gain (loss) from foreign currency transactions. The loan payable to Sino Pride is denominated in US dollars. The loan was for working capital and is not designed as an investment. The repayment is required when the Company is profitable or is available to make repayment. The transactions of loan proceeds and repayments are dominated in US dollars. The Company uses the bank spot exchange rate to record proceeds and repayments in RMB in the Company’s books. By the end of the year, the US$ loan balance and interest payable will be translated to RMB and recorded on DVPD’s and DVBM’s books. Loans, repayments and accrued interest payable to Sino Pride as of June 30, 2020 are as followed: (Unaudited) Loan Payable to Sino Pride Loan balance at December 31, 2018 $ 13,503,748 Repayment in 2018 (200,000 ) Repayment in 2019 - Repayment in the six months ended June 30, 2020 - Loan balance at June 30, 2020 $ 13,303,748 Interest Payable to Sino Pride Interest payable at 12/31/2017 $ 7,451,973 Accrued interest in 2018 1,079,968 Accrued interest in 2019 1,079,083 Interest payable at December 31, 2019 9,611,024 Accrued interest in the six months ended June 30, 2020 539,540 Interest payable at June 30, 2020 $ 10,150,564 The above inter-company loan payable of $13,303,748 and $13,303,748, and accrued interest payable of $10,150,564 and $9,611,024 at June 30, 2020 and December 31, 2019, respectively, have been eliminated in the accompanying consolidated financial statements. The interest expense of $535,374 and $540,713 for the six months ended June 30, 2020 and 2019, respectively, have been eliminated in the accompanying consolidated financial statements. Loan Payable to Shareholder/Due to Shareholder Due to shareholder represents the investment amount that Sino Pride received from its former shareholders, which was assigned to the Company’s current major shareholder, Mr. Alex Brown. Loan payable to shareholder was $66,396,293 and $65,931,644, respectively, at June 30, 2020 and December 31, 2019. During the six months ended June 30, 2020 and 2019, Mr. Alex Brown advanced $673,578 and $949,420 to the Company, respectively. The balance due to shareholder bears no interest and is payable on demand. If the interest was calculated at 3.25% (June 2020 US (Fed) Prime rate) for the loan payable to shareholder, the balance for interest expense would have been approximately $1.1 million and $1.1 million for the six months ended June 30, 2020 and December 31, 2019, respectively. Transfer of Ownership of Sino Pride Iven International Group Limited, is a company registered in Hong Kong (“Iven”). From October 31, 2016 to June 30, 2017, Alex Brown beneficially owned 100% of Iven, among which, a 70% equity interest was held directly, and a 30% equity interest was held indirectly through Dalian Yiwen New Materials Technology Development Co., Ltd, a PRC entity 80% owned by Alex Brown and 20% owned by his spouse. On June 30, 2017, Alex Brown and Dalian Yiwen New Material Technology Development Co., Ltd transferred their respective ownership of Iven to Winner Ascent Investment Limited, a Hong Kong limited liability company solely owned by Alex Brown. On November 2016, Iven entered and executed an agreement of “Assignment of Common Stock and Debt Rights” (“the Original Agreement”) from VP Holding. Pursuant to the Original Agreement, Iven acquired all 30,000,000 shares of common stocks of Sino Pride then outstanding and assumed debt rights (Sino Pride owned to VP Holding) for a nominal consideration of HK$ 1 (approximately $0.13) from VP Holding. On September 4, 2017, VCI signed “Assignment of All Outstanding Shares and All Debt Right Agreement” (“the Agreement”) with Iven. Pursuant to the Agreement, VCI acquired all 30,000,000 shares of common stock of Sino Pride then outstanding and assumed shareholder debt and loan rights of HK$493,807,633 (approximately $64,208,000) (Sino Pride owed to VP Holding) included outstanding shareholder loan of HK$ 408,409,628 (approximately $53,093,000) for nominal consideration of HK$ 1 (approximately $0.13) from Iven. The transfer was part of the restructuring to prepare the Company for listing in the U.S. capital market. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 16 - INCOME TAXES The Company accounts for income taxes pursuant to FASB ASC 740 “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. Additionally, the accounting standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carry forwards for income tax purposes as compared to financial statement purposes, are dependent upon future taxable income and timing of reversals of future taxable differences along with any other positive and negative evidence during the periods in which those temporary differences become deductible or are utilized. DVPD and DVBM are located in China and governed by the Income Tax Law of the PRC. Under the Income Tax Laws of the PRC, Chinese companies are generally subject to an income tax at an effective rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments. DVPD and DVBM are subject to these statutory rates. Operating losses can be carried forward for five years. Sino Pride is located in Hong Kong and governed by the Tax Laws of Hong Kong. Assessable profits of corporations are taxed at the corporate tax rate of 16.5%. Tax losses can be carried forward to offset profits in future years until fully absorbed but cannot be carried back. VCM was incorporated in the U.S. on July 5, 2017 and is governed by the U.S. Federal tax laws and the State of Nevada (Incorporation State). On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”), which significantly modified U.S. corporate income tax law, was signed into law by President Trump. The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of the current year’s taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to be carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law. As of June 30, 2020 and December 31, 2019, DVPD, DVBM and Sino Pride had a combined net foreign operating loss carry forwards of approximately $10.2 million, translated at June 30, 2020 exchange rate, and $7.8 million, translated at December 31, 2019 exchange rate, respectively that may be available to reduce future years’ taxable income. These foreign losses may not offset US income taxes in the future. Management believes that it appears more likely than not that the Company will not realize these tax benefits. As of June 30, 2020 and December 31, 2019, VCM had approximately $3.3 million and $2.7 million net operating loss carryforwards, respectively. In the U.S net operating losses incurred prior to December 31, 2017, can be carried forward 20 years. Under the TCJA, net operating losses can be carried forward indefinitely. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Act (CARES Act), was signed into law, which made significant changes to the Net Operating Loss (NOL) carryback rules, for both individuals and businesses. Under the TCJA, for tax years beginning in 2018 and thereafter, NOL carrybacks are not allowed. Rather, NOLs are carried forward indefinitely but limited to 80 percent of taxable income. The CARES Act temporarily suspends these provisions. Under the CARES Act, NOLs generated in tax years beginning after December 31, 2017 and before January 1, 2021 (i.e., 2018, 2019 and 2020 for calendar year taxpayers), can be carried back five years and carried forward indefinitely with no limitation. The Company has no operating income in the US as of the date of reporting. Management believes that it appears more likely than not that the Company will not realize these tax benefits. VCM’s tax return for the years ended December 31, 2017 and 2018 are open to IRS inspection. Future tax benefits which may arise as a result of net operating losses have not been recognized in the accompanying consolidated financial statements as their realization has not been determined likely to occur. Also, due to the change in control, there are annual limitations on future net operating loss carryforward deductions. As future earnings are uncertain, the Company has provided a valuation allowance for the entire amount of the deferred tax asset. The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are “more likely than not” of being sustained by the applicable tax authority “More likely than not” is defined as greater than a 50% chance. At June 30, 2020 and December 31, 2019, deferred tax assets consisted of: June 30, December 31, 2020 2019 (Unaudited) Net operating loss carryforwards Foreign operations $ 15,761,137 $ 13,366,178 US operations 700,439 560,079 Valuation allowance (16,461,576 ) (13,926,257 ) Deferred tax assets - net $ - $ - The valuation allowance was increased by $2,535,319 and $1,815,795 for the six months ended June 30, 2020 and 2019, respectively. The provision for income taxes for the six months ended June 30, 2020 and 2019 are summarized as follows: June 30, June 30, 2020 2019 (Unaudited) Current $ - $ - Deferred 1,037,152 1,815,795 Change in valuation allowance (1,037,152 ) (1,815,795 ) Total $ - $ - |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | NOTE 17– STOCKHOLDERS’ EQUITY The Company is authorized to issue up to 600,000,000 shares of common stock, par value $0.0001 per share. On November 13, 2017, the Company issued 20,700,000 shares of its common stock to Alex Brown, Chairman and Chief Executive Officer of the Company and received consideration of $2,070 in cash. Initial Public Offering Pursuant to the Registration Statement on Form S-1 The Company closed its initial public offering on March 28, 2019. The offering price was $1 per share. The Company sold 1,011,000 shares and received all proceeds from the investors of $1,011,000. |
Statutory Reserve
Statutory Reserve | 6 Months Ended |
Jun. 30, 2020 | |
Statutory Reserve | |
Statutory Reserve | NOTE 18 - STATUTORY RESERVE Pursuant to the PRC law, entities must make appropriations from after-tax profits to a non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until such appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each yearend). DVPD and DVBM have not made any appropriations to the statutory reserve as of June 30, 2020 and June 30, 2019, as DVPD and DVBM have not yet generated any after-tax profits. |
Noncontrolling Interest
Noncontrolling Interest | 6 Months Ended |
Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | NOTE 19 – NONCONTROLLING INTEREST Noncontrolling interest represents DVDC’s 20% equity ownership interest in DVPD and DVPD’s operating results including its 5% equity ownership interest in DVBM. Non-controlling interest consisted of the following as of June 30, 2020 and December 31, 2019: June 30, 2019 December 31, 2019 (Unaudited) Noncontrolling interest at beginning of the period $ (43,033,931 ) $ (42,242,097 ) Net loss (334,132 ) (1,495,208 ) Foreign currency translation adjustment (137,015) 436,517 Noncontrolling interest at end of the period $ (43,505,078 ) $ (43,300,788 ) |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 20 - COMMITMENTS AND CONTINGENCIES Country Risk Our PRC subsidiaries are subject to laws and regulations applicable to various laws and regulations generally applicable to companies in China. As the Company’s principal operations are conducted currently in the PRC, it is subject to contingencies and risks not typically associated with companies in North America and Western Europe. These risks include, among others, risks associated with the political, economic and legal environments and foreign currency exchange limitations encountered in the PRC. The Company’s results of operations may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, among other things. In addition, all the Company’s transactions in the PRC are denominated in RMB, which must be converted into other currencies before remittance from the PRC. Both conversion of RMB into foreign currencies and remittance of foreign currencies abroad require approval of the PRC government. Legal Proceedings As of June 30, 2020, the Company had property financing agreements payable of $72,961,523, lease liabilities payable of $17,768, lease-back payables past due of $5,431,553, guaranteed rent payable of $278,435, and unpaid balances in connection with property buy-backs of $4,086,077. As of June 30, 2020, there were total of 579 lawsuits against the Company in Dalian City, China. Litigants claimed that the Company did not buy back the property pursuant to the sales contract or the Company did not pay the lease-back rental payments on time. These claims amounted to $24,580,425 (RMB 173,891,761 translated at the June 30, 2020 exchange rate). These payables were included in and reported under the caption of “Property financing agreements payable”, “Lease liabilities payable” and “Other payables”. In connection with the progress of these cases, the Company accrued $4,666,944 for possible extra litigation charges. The Company records the related attorney fees when invoiced. The attorney fees in connection with these cases was $1,212 and $0 for the three months ended June 30, 2020 and 2019, respectively; $8,863 and $13,900 for the six months ended June 30, 2020 and 2019, respectively. The nature of these lawsuits is to demand the Company buy-back property per agreements or to pay unpaid rent per lease-back agreements. The Company has been accruing the interest and included in property financing agreements payable and lease liabilities payable based on the lease agreements. The Company records the expired lease-back payables and unpaid buy-back payables in other payables and accrues additional estimated liabilities. The management believes that current recorded liabilities were reasonable estimates of the total final buy-back payments and total final lease-back payables. Should the ultimate settlement of these liabilities to exceed the amount already recognized, the Company will accrue additional estimated liabilities when known. To deal with the litigation issues, the Company has worked with the plaintiffs and other owners of the lease-back property. At the same time, SML has helped to resolve the litigation cases. The progress, however, has been very slow. As of the date of this Quarterly Report, the Company’s task group and SML have collectively resolved a total of 565 cases out of which 9 cases were resolved during the six months ended June 30, 2020. Collateral of Company’s Asset to Three Individuals On May 18, 2017, 140 square meters (1,507 square feet), owned by the Company was used as collateral to help on unrelated individual borrow $770,000 (RMB5,000,000) under a one-year bank loan. There was no profit or gain for the Company to provide this collateral. The one-year period is now past due. The Company is exposed to the loss of this property if the individual is insolvent and fails to settle the bank loan. On May 18, 2017, the Company allowed one of its board members of DVPD to use 7 units of rental properties, totaling 138 square meters (1,485 square feet), owned by the Company as collateral to borrow $770,000 (RMB5,000,000) under one-year bank loan. There was no profit or gain for the Company to provide this collateral. The one-year loan is now past due. The Company is exposed to the loss of this property if the individual is insolvent and fails to repay the bank loan. On May 18, 2017, the Company allowed one of its board members of DVPD to use 2 units of rental properties, totaling 15 square meters (161 square feet), owned by the Company as collateral to borrow $770,000 (RMB 5,000,000) under a one-year bank loan. There was no profit or gain for the Company to provide this collateral. The one-year period is past due. The Company exposed to the loss of these properties if the individual is insolvent and fails to settle the bank loan. These individuals have not yet returned the loans back to Harbin Bank, which exposes the Company to a loss if the individuals are insolvent and fail to repay the bank loans. On December 30, 2019, the Company entered into three separate Repayment Agreements with these individuals. The agreements stipulate that these three individuals have to either pay back the loan of RMB 5 million to the bank or provide their own collateral so as to release the Company’s property by December 31, 2020. In addition, the agreements require these three individuals pay RMB 50,000 to the Company by May 31, 2020 along with other penalty clauses if these three individuals fail to abide by the agreements. In May 2020, these three individuals made the payments of RMB 50,000 to the Company. The Company has a risk of losing these properties if these individuals are not able to repay these bank loans. |
Concentration of Credit Risk
Concentration of Credit Risk | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | NOTE 21 – CONCENTRATION OF CREDIT RISK The Company maintains cash balances in various banks in China and the Special Region of Hong Kong. Per regulation of PRC, the maximum insured for each bank deposit amount is approximately $72,700 (RMB 500,000) for each financial institution. As of June 30, 2020, the Company’s uninsured cash balance was approximately $26,590. The Company receives rental and management fee income from approximately 700 tenants. Revenue from the top ten tenants accounted for 15.51% and 19.72% of total revenue, for the six months ended June 30, 2020 and 2019, respectively, no individual tenant’s revenue accounts for more than 10% of the total revenue in the above periods. Accounts receivable from the top ten tenants accounts was 12.74% and 12.6% as of June 30, 2020 and December 31, 2019 respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 22 - SUBSEQUENT EVENTS Lawsuits Subsequent to June 30, 2020, 4 new lawsuits with new claims amounting to $518,594 were filed against the Company. As of August 10, 2020, there were a total of 583 lawsuits against the Company in Dalian City, China. Litigants claimed that the Company did not buy back the properties pursuant to the sales contracts or the Company did not pay the promised lease-back rental payments on time. These claims amounted to $25,099,019 (RMB174,209,782). Management believes that the amount claimed by these litigants approximates the amount that the Company has already recorded under the caption of “Property financing agreements payable”,” Lease liabilities payable” and “Other payables” in the accompanying unaudited condensed consolidated financial statements. Claims of Lawsuits as of August 10, 2020 Store Unit Square Feet Claimed Amount (Unaudited) Property buy-back related issues 242 51,870 $ 20,052,852 Leases and lease back related issues 244 47,721 2,910,003 Other issues 97 5,348 2,136,164 Total 583 104,939 $ 25,099,019 As of August 10, 2020, the Company settled the following cases. Total Resolved Cases (Unaudited) Property buy-back related issues 239 Leases payment related issues 243 Other issues 83 Total resolved cases 565 To deal with the litigation issues, the Company has worked with the plaintiffs and other owners of the lease-back property. At the same time, SML has helped to resolve the litigation cases. The progress, however, has been very slow. As of the date of this Quarterly Report, the Company’s task group and SML have collectively resolved a total of 565 cases. Impact of COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”) and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. Many uncertainties remain regarding the COVID-19 pandemic, and it is impossible at this time to predict the full economic impact and the impact on our business. Since the Company primarily engages in the business of the multi-functional shopping center are located in Dalian, Liaoning, China, the COVID-19 pandemic is expected to lead to a significant impact on our business operations. In late January 2020, the Dalian government released a stop order on all activities that involved gathering, including a temporary suspension of shopping malls. As a result, all retailors and service providers of our shopping center were shut down until further notice, subject to the containment of the COVID-19 . , On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security Act” (“CARES ACT”). The Company is evaluating the impact, if any, that the CARES Act may have on the Company’s future operations, financial position, and liquidity in fiscal year 2020. On June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act (PPPFA) in an attempt to address many concerns expressed by the small business community around the Paycheck Protection Program (PPP) aimed at providing COVID-19 relief. PPPFA specifies that 60% of the loan needs to be used for employee payroll and the remaining 40% for rent and utilities related expense. PPPFA grants a 24-weeks for the Company to use the funds. If the loan is used exclusively for the above qualified expenses, the loan will be forgiven. In May, 2020, the Company received a PPP loan from the government in the amount of $114,970. As of the date hereof, the Company is still closely monitoring the fluid and rapidly evolving situation of COVID-19 and manages to maintain the operation of its business. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of consolidation These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) filed with the Securities and Exchange Commission on May 29, 2020. In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the condensed consolidated financial statements for interim periods. The Company’s condensed consolidated financial statements include the accounts of VCM, VCI, Sino Pride, DVPD, DVBM, and DVPM. All inter-company accounts and transactions among the consolidation group have been eliminated in consolidation. Certain prior year balances have been reclassified to conform to current year’s presentation. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the consolidated financial statements and during the reporting periods. Actual results could materially differ from these estimates. Significant estimates include the liabilities recorded for financial agreements payable, buy-backs payable, lease back liabilities payable, expired lease payables and the estimated liability accrued for additional litigation charges related to the numerous lawsuits. Other estimates include the allowance for doubtful accounts on tenant receivables and other receivables, recoverability of long-lived assets, the useful life of rental properties, property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and the valuation of deferred tax assets. |
Foreign Currency Translation | Foreign Currency Translation The reporting currency of the Company is the U.S. dollar. The functional currency of VCM and VCI is the U.S. dollar, the functional currency of DVPD, DVBM, and DVPM is the Chinese Renminbi (“RMB”), and the functional currency of Sino Pride is the Hong Kong Dollar (“HK$”). The condensed unaudited consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC 830-30 “Translation of Financial Statements”. The financial information is first prepared in RMB or HK$ and then is translated into the U.S. dollar at the period-end exchange rates as to assets and liabilities and at average exchange rates as to revenue, expenses and cash flows. Equity accounts are translated at their historical exchange rates when the capital transactions occurred. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into the U.S. dollar are included in accumulated other comprehensive income (loss). The cumulative translation adjustment and effect of exchange rate changes on cash for the periods ended June 30, 2020 and December 31, 2019 were $(55,938) and $(2,242,729), respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate prevailing at each balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Pursuant to paragraph 830-20-35-1, the intra-entity (intercompany transactions) foreign currency transactions whose terms are denominated in the currency other than the Company’s functional currency and settlement is anticipated in the foreseeable future (hence not long-term investment nature), the increases or decreases in expected functional currency cash flows are included in determining net income (loss) for the period in which the exchange rate changes. The Company has an inter-company loan denominated in US dollars. The repayment of the loan is required when the Company is profitable. The loan proceeds, repayment and accrued interest were tracked in US dollars. The Company uses the bank spot exchange rate to record proceeds and repayments in RMB. By the end of the reporting period, the Company will adjust loan and interest payable balances from US dollars to RMB by using the period ending exchange rate. Any gain or loss from foreign currency exchange will be recognized in the consolidated statements of operations. There were $90,381 foreign currency transaction gain for the three months ended June 30, 2020 and $524,372 loss for the three months ended 2019, and $367,986 loss for the six months ended June 30, 2020 and $18,358 gain for the six months ended 2019. Spot exchange rates and average exchange rates published by fxtop.com were used in the translation of the consolidated financial statements. For the three months ended June 30, For the six months ended June 30, US Exchange Rate 2020 2019 2020 2019 (unaudited) (unaudited) Period-end RMB 7.0744 6.8704 7.0744 6.8704 Average RMB 7.0891 6.8276 7.0335 6.7871 Period-end HK$ 7.7503 7.8090 7.7503 7.8090 Aaverage HK$ 7.7512 7.8400 7.7611 7.8432 All foreign exchange transactions must take place through authorized institutions of China. Management makes no representation that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. |
Revenue Recognition | Revenue Recognition Rental Income Our Victory Plaza currently has 3,173 rental units. Among these rental properties, the Company owned 433 units, 814 units were sold but with buy-back options, and 1,926 units were sold with no repurchase options. The Company will lease back some of these sold properties and rent them out to tenants. All contracts include a lease and contain information on rental income and payment term. Rental income is reported in the gross amount including rent income from our owned properties and lease-back properties. A predominately majority of the rental income comes from our owned properties and a very limited portion, estimated at less than 3%, from the lease-back properties. Existing lease-back expenses were recorded as amortization and interest expenses. Expired lease-back expenses were included in the lease-back expenses. The Company recognizes the rental income on a straight-line basis over the terms of the leases. The cumulative differences between rental income recognized in the Company’s consolidated statements of operations and contractual payment terms have been recorded as deferred rental income and presented on the accompanying consolidated balance sheets. Property Management Fee Income We currently provide common area management services to all tenants and shop owners. Common area management services include security, cleaning, fire service, landscaping, public facilities maintenance and other traditional services provided by a property management office. The terms of the property management agreements are usually consistent with the tenants’ lease term. Property management fees are charged based on the area of property ranging from $16 to $19 per square foot per annum. Since the performance obligations in the property management agreement are identical with the terms of property management agreement, the Company recognizes the propriety management income on a straight-line basis over the terms of the management agreement. The cumulative differences between property management income recognized in the Company’s consolidated statements of operations and contractual payment terms have been recorded as deferred income and presented on the accompanying consolidated balance sheets. Expense Recovery The Company will pay utility, repair and insurance expenses to third party vendors in order to fulfill its management obligations. The Company will charge all or part of these expenses to tenants in addition to property management fees. The charge will depend on the size of tenant and terms of property management agreement. The Company is acting as an agent to arrange for the provision of utilities, repairs and other services by third parties. The Company will recognize the fees collected as income after the Company’s service is provided. The recovered expenses will offset the income the Company is paid and be reported net under the caption of other income in accompanying consolidated financial statements. |
Rental Properties | Rental Properties Rental properties are carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvements of rental properties are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets. Improvements are capitalized and amortized over the shorter of their estimated useful lives or the terms of the respective leases, if any. When rental properties are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. The following table summarized the ownership of rental properties. % of Total Financial Statement Presentation Group Description of Property SQ Ft Assets Liabilities (Unaudited) A Owned with title by DVPD 16 % Rental properties N/A B Sold properties with buy- back options or return is in process without paying off 9 % Rental properties Property financing agreements payable C* Properties with buy- back options transferred to SML in 2017 and 2018 6 % Rental properties Loan payable SML D Sold properties 69 % N/A N/A Total properties 100 % Group A represents property that the Company owns 100%. Group B represents property we sold to individual owners with buy-back options which are pending. Group C represents property owned by SML, but the Company is still liable for the buy-back options. Pursuant to the SML Agreement, the Company is obligated to buy back these properties plus accrued interest no later than May 15, 2020. Group D presents property we sold to various individual owners without additional rights attached. Acknowledging the impact of COVID-19, on January 15, 2020, the Company amended its agreement with SML to extend the original repayment date from May 15, 2020 to May 15, 2023. Sold Rental Properties with Financing Agreements (Group B and C Properties) Pursuant to the sales contracts, the buyers’ obtained legal title to the property and also had an option to sign a separate buy-back agreement. The purchase agreement granted the buyer an option to request the Company to buy back sold properties at a stated buy-back price once the option is vested and the Company has received the payments for the sold property. As of June 30, 2020, approximately 15% of total rental spaces of Victory Plaza were sold to various unrelated individuals and entities with buy-back options. The majority of these properties were sold during the period from 1998 to 2014. The vesting dates of the buy-back options ranged from 2014 to 2018. Pursuant to FASB ASC 360-20-40-38, if a property seller has an obligation to repurchase the property, or the terms of the transaction allow the buyer to compel the seller or give an option to request the seller to repurchase the property, the transaction shall be accounted for as financing, lease, or profit-sharing arrangement rather than as a sale. It is aligned with FASB ASC 842-40-25-3, an option for the seller-lessee to repurchase the asset would preclude accounting for the transfer of the asset as a sale of the asset. The Company’s accounting policy is to treat this type of sales as a financing agreement. The Company continues to report its ownership of the property sold as an asset (within Rental Properties) and continues to depreciate the property based on the estimated useful lives. The Company recorded sales proceeds as “property financing agreements payable” in the consolidated financial statements and accrues the interest payable during the periods of the vesting. The interest rate is determined by the price spread of each unit’s sale price and buy-back price, and the time span from the date of sale to the maturity date (last date to execute the option). The Company will derecognize the liability when the Company purchases back the properties, or the owners of these properties have settled with the Company or gave up the buy-back options, or upon the expiration of the option if not exercised. If the settlement is greater than the book amount (including principal and interest), a loss will be recognized. If the amount of settlement is less than book amount (including principal and interest), a gain will be recognized. See Note 10, Property Financing Agreement Payable for further information. Sold Properties (Group D Properties) As of June 30, 2020, approximately 69% of the total space of Victory Plaza was sold and owned by various unrelated individuals and entities with legal title to the respective properties. Pursuant to the sale contracts, at the date of the sales, buyers obtained integrated legal ownership to the sold properties and assumed the significant risks and rewards of ownership of the property (had the ability to rent and sell the property at-will) while the Company received the payments of the purchase price. These sales are considered final sales. As part of our operations, the Company may from time to from lease back properties from the owners of Group D properties and subleases these properties to un-related third parties with new lease terms. As of June 30, 2020, there was no sublease from the owner of Group D properties. Sales and lease-back are two separate business transactions. Lease-back is at the owner’s will and is not a condition of sale. Lease-back could happen immediately after the sale of property or at any time after the sale if the owner of the property is interested in rental services provided by the Company. Under FASB ASC Topic 842, a sale and lease-back arrangement will be accounted for as a sale if all of the following conditions are met: (i) control of the underlying asset is transferred to the buyer-lessor in accordance with the revenue recognition guidelines in FASB ASC Topic 606, Revenue from Contracts with Customers, (ii) the classification of the sublease is not a finance lease from the perspective of the lessee, or a sales-type lease from the perspective of the lessor, and (iii) there is no repurchase option. All these lease-back arrangements met the above criteria and have been accounted for as a sale. The allocated net book value and land use rights were derecognized, and a gain or loss was recognized when each of the sales was completed. |
Lessee Accounting | Lessee Accounting We have elected to early adopt FASB ASC Topic 842, the recent accounting update related to leases. FASB ASC 842 requires us to determine whether a contract is a lease or contains a lease at the inception of the contract, considering all relevant facts and circumstances. A contract is a lease or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee should include payments to be made in optional periods only if the lessee is reasonably certain to exercise its option to extend the lease or not exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. A lease is classified as a finance lease when the lease meets any of the following criteria: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease not classified as a finance lease is classified as an operating lease. The lease liability is initially measured at the present value of lease payments to be paid as of lease commencement. Lease payments should be discounted at the rate implicit in the lease or lessee’s incremental borrowing rate. The right-of-use asset is initially measured as: (i) the lease liability determined, (ii) lease payments made to the lessor at or before lease commencement, minus lease incentives received from the lessor, and (iii) initial direct costs incurred by the lessee. A lessee will measure the lease liability by (a) accreting interest expense on the carrying value of the lease liability using the effective interest rate method, and (b) reducing the carrying value of the lease liability for lease payments made. A lessee will measure the right-of-use asset by amortizing that asset over the lease term. Amortization is recorded on a straight-line basis. The right-of-use asset will also be tested for impairment based on the asset impairment rules that apply to property, plant and equipment in FASB ASC Topic 360. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying assets not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. |
Lessor Accounting | Lessor Accounting The Company currently owns 433 rental units and leased these rental properties to various tenants. Pursuant to FASB ASC 842 – 30, the Company will classify a lease as a sales – type lease if: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of June 30, 2020, none of our leases, as a lessor, met the above criteria to be classified as a sales–type lease. Pursuant to FASB ASC 842 – 30, when none of the sales-type lease classification criteria are met, a lessor would classify the lease as a direct financing lease when both of the following criteria are met: (i) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all (90% or more) of the fair value of the underlying asset and (ii) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. As of June 30, 2020, none of our leases, as a lessor, met the above criteria to be classified as a financing lease. Pursuant to FASB ASC 842 – 30, a lessor would classify a lease as an operating lease when none of the sales-type lease or direct financing lease classification criteria are met. As of June 30, 2020, all leases of the Company’s rental properties were classified as operating leases. The Company will maintain the underlying asset and recognizes lease income on the straight line basis over the lease term. |
Disposition of Real Estate and Real Estate Investments | Disposition of Real Estate and Real Estate Investments Sales of real estate include operating properties and investments in real estate joint ventures. Gains from dispositions are recognized using the full accrual or partial sale methods, provided that the Company has met various criteria relating to the terms of sale and any subsequent involvement. If the criteria for sales recognition or gain recognition are not met because of a form of continuing involvement, the accounting for such transactions is dependent on the nature of the continuing involvement. In certain cases, a sale might not be recognized, and in others all or a portion of the gain might be deferred. |
Real Estate Held for Sale | Real Estate Held for Sale The Company generally considers assets to be held for sale when management believes that a sale is probable within a year. This generally occurs when a sales contract is executed with no substantive contingencies and the prospective buyer has significant funds at risk. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell. The Company evaluated its property portfolio and did not identify any properties that would meet the criteria for held for sale as of June 30, 2020 and December 31, 2019. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and demand deposits in accounts maintained with commercial banks within the PRC, Hong Kong and United States. The Company considers all short-term highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash represents cash deposits required by the bank to be used for interest and loan repayments only. |
Tenant and Sundry Receivables, Net of Allowance for Doubtful Accounts | Tenant and Sundry Receivables, net of Allowance for Doubtful Accounts Tenant receivables are recorded at original invoice amount, less an estimated allowance for doubtful accounts. The allowance for doubtful accounts represents management’s estimate of the amount of probable credit losses, determined by reviewing past due balances and other information. The Company makes judgments as to the collectability of tenant receivables based on historical trends and future expectations. Management estimates an allowance for doubtful accounts and adjusts gross tenant receivables downward based on their expectation of specific tenant risks and the Company’s tenant receivable aging and collection analysis. Management considers accounts past due on a tenant-by-tenant basis. Based on its review, management has provided an allowance for doubtful accounts as of June 30, 2020 and December 31, 2019 of $663,841 and $632,768, respectively. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost, less accumulated depreciation. Cost includes any incremental costs that are directly attributable to the construction or acquisition of the item of property and equipment. Maintenance and repairs are expensed as incurred, while major maintenance and remodeling costs are capitalized if they extend the useful life of the asset. Depreciation is computed using the straight-line method over the estimated useful lives. When properties and equipment are sold or otherwise disposed of, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in the results of operations. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, primarily rental properties and machinery and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its estimated undiscounted future cash flows over the anticipated holding period and measures the impairment loss based on the amount by which the carrying amount of the asset exceeds its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values or third-party independent appraisals, as considered necessary. There were no impairment losses recognized during the three and six months ended June 30, 2020 and 2019. |
Debt Issuance Costs | Debt Issuance Costs Costs related to bank loans payable consist of fees and direct costs incurred in obtaining such financings. These costs are presented as a reduction of bank loans payable and are amortized on a straight-line basis over the terms of the related loan payable which approximates the effective interest rate method. Such amortization is included in “Interest – loans” in the accompanying consolidated statements of operations, which amounted to $13,205 and $13,930 for the three months ended June 30, 2020 and 2019, respectively; $26,830 and $27,870 for the six months ended June 30, 2020 and 2019. |
Per Share Amounts | Per Share Amounts The Company computes per share amounts in accordance with FASB ASC Topic 260 “Earnings per Share |
Noncontrolling Interest | Noncontrolling Interest Noncontrolling interest is classified as a separate line item in the equity section and disclosures in the Company’s consolidated financial statements. This amount represents the 20% non-controlling interest in DVPD owned by DVDC. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) The Company follows ASC 220-10, “Reporting Comprehensive Income” |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following disclosure of the estimated fair value of financial instruments is made in accordance with the provision of FASB ASC 825-10-65, “ Financial Instruments – Transition and Open Effective Date Information |
Income Taxes | Income Taxes The Company is governed by the Income Tax Law of the PRC, the Special Region of Hong Kong and the U.S. Internal Revenue Code of 1986, as amended. The Company accounts for income taxes using the asset/liability method prescribed by FASB ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. Deferred tax assets are also provided for net operating loss carryforwards that can be used to offset taxable income in the future. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income or loss in the period that includes the enactment date. The Company follows the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarter or annual period based, in part, upon the results of operations for the given period. As of June 30, 2020 and December 31, 2019, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future. |
Fair Value Measurements | Fair Value Measurements The Company complies with the provisions of FASB ASC 820 “Fair Value Measurements and Disclosure ASC 820-10-35 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1 Inputs – Level 1 inputs are unadjusted quoted prices in active markets for assets or liabilities identical to those to be reported at fair value. An active market is a market in which transactions occur for the item to be fair valued with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Inputs – Level 2 inputs are inputs other than quoted prices included within level 1. Level 2 inputs are observable either directly or indirectly. These inputs include: (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active, such as when there are few transactions for the asset or liability, the prices are not current, price quotations vary substantially over time or in which little information is released publicly; (c) Inputs other than quoted prices that are observable for the asset or liability and (d) Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Inputs – Level 3 inputs are unobservable inputs for an asset or liability. These inputs should be used to determine fair value only when observable inputs are not available. Unobservable inputs should be developed based on the best information available in the circumstances, which might include internally generated data and assumptions being used to price the asset or liability. When determining the fair value measurements for assets or liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Company looks to active and observable markets to price identical assets. When identical assets are not traded in active markets, the Company looks to market observable data for similar assets. Nevertheless, certain assets are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement. |
Related Parties | Related Parties Parties are considered to be related to the Company if they, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its separate interests. The Company discloses all related party transactions. |
Deferred Rental Income | Deferred Rental Income Rental and management fee income from leases are recognized on a straight-line basis over the term of the relevant leases. The cumulative difference between the rental income/management fees recognized in the Company’s consolidated statements of operations and actual annual contractual lease payments are recorded as deferred rental income and presented on the consolidated balance sheets. Additionally, prepaid lease payments from the tenant is included in deferred income. |
Advertising | Advertising Advertising is expensed as incurred and is included in other general and administrative expenses. There were $0 and $1,665 advertising expenses for the three months ended June 30, 2020 and 2019, respectively; $514 and $2,459 for the six months ended June 30, 2020 and 2019, respectively. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which to include share-based payment transactions for acquiring goods and services from non-employees, which nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the goods have been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. The definition of the term grant date is amended to generally state the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share based payment award. The amendments are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 eliminates certain disclosures related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. ASU 2018-13 is effective for the Company for annual and interim reporting periods beginning July 1, 2020. The Company does not believe the adoption of this ASU will have a material effect on the Company’s consolidated financial statements. In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning July 1, 2020. The Company does not believe the adoption of this ASU 2019-05 will have a material effect on the Company’s consolidated financial statements. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Average Exchange Rates for Converting Foreign Currencies into U.S. Dollars | Spot exchange rates and average exchange rates published by fxtop.com were used in the translation of the consolidated financial statements. For the three months ended June 30, For the six months ended June 30, US Exchange Rate 2020 2019 2020 2019 (unaudited) (unaudited) Period-end RMB 7.0744 6.8704 7.0744 6.8704 Average RMB 7.0891 6.8276 7.0335 6.7871 Period-end HK$ 7.7503 7.8090 7.7503 7.8090 Aaverage HK$ 7.7512 7.8400 7.7611 7.8432 |
Schedule of Ownership of Rental Properties | The following table summarized the ownership of rental properties. % of Total Financial Statement Presentation Group Description of Property SQ Ft Assets Liabilities (Unaudited) A Owned with title by DVPD 16 % Rental properties N/A B Sold properties with buy- back options or return is in process without paying off 9 % Rental properties Property financing agreements payable C* Properties with buy- back options transferred to SML in 2017 and 2018 6 % Rental properties Loan payable SML D Sold properties 69 % N/A N/A Total properties 100 % |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Prepaid Expenses And Other Assets | |
Schedule of Prepaid Expenses and Other Assets | Prepaid expenses and other assets consist of the following: June 30, December 31, 2020 2019 (Unaudited) Supplies on hands $ 83,641 $ 100,156 Prepaid expenses 293,991 331,454 Deposits 88,790 95,224 Total prepaid expenses and other assets $ 466,422 $ 526,834 |
Rental Properties, Net (Tables)
Rental Properties, Net (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Rental Properties Net | |
Schedule of Rental Properties | The following table summarized ownership of rental properties. As of June 30, 2020 Group Description of Property Cost in In Square Feet % of Total Square Feet Unites (Unaudited) A Owned by DVPD $ 21,357,786 240,455 16 % 433 B Sold properties with buy- back options or return is in process without paying off 11,516,477 130,394 9 % 495 C Properties with buy- back options transferred to SML in 2017 and 2018 * 7,538,313 86,251 6 % 319 D Sold properties without buy- back options - 1,023,519 69 % 1,926 Rental properties at cost 40,412,576 1,480,619 100 % 3,173 Less: Accumulated depreciation (19,868,892 ) Rental properties, net $ 20,543,684 As of December 31, 2019 Group Description of Property Cost in In Square Feet % of Total Square Feet Unites A Owned by DVPD $ 21,704,162 240,455 16 % 433 B Sold properties with buy- back options or return is in process without paying off 11,703,248 130,394 9 % 495 C Properties with buy- back options transferred to SML in 2017 and 2018 * 7,660,568 86,251 6 % 319 D Sold properties without buy- back options - 1,023,519 69 % 1,926 Rental properties at cost 41,067,978 1,480,619 100 % 3,173 Less: Accumulated depreciation (19,733,963 ) Rental properties, net $ 21,334,015 * See Note 11, Property Financing Agreement Payable |
Schedule of Expected Future Minimum Rents | Expected future minimum rents to be received over the next few years from leases in effect as of June 30, 2020 are as follows: For the Twelve Months Ending June 30, Amount (Unaudited) 2021 $ 75,318 2022 78,255 2023 29,839 Total $ 183,412 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment are composed of the following: Estimated June 30, 2020 December 31, 2019 (Unaudited) Rental property 45 years $ 214,995 $ 218,482 Office equipment 3-5 years 315,449 319,359 Business machinery and equipment 5-10 years 2,897,610 2,944,603 Auto 5 years 24,182 24,574 Improvements 5-10 years 9,838,276 9,997,516 Total properties, machinery and equipment 13,290,512 13,504,534 Less: accumulated depreciation and amortization (12,951,499 ) (13,074,471 ) Property and equipment, net $ 339,013 $ 430,063 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the software used in property management, which has a 5-year estimated useful life. The cost and related amortization are as follows: Property Management Software June 30, December 31, (Unaudited) Cost $ 25,408 25,819 Less: accumulated depreciation (10,489 ) (8,179 ) Intangible assets, net $ 14,919 17,640 |
Right of Use Assets (Tables)
Right of Use Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Right Of Use Assets | |
Schedule of Lease Liability Maturity | Lease Liability maturities as of June 30, (Unaudited) 2021 $ 176,516 2022 171,741 2023 31,427 Total Lease Liability maturities $ 379,684 |
Schedule of Right of Use Assets | Right of use (“ROU”) assets consist of the followings as of June 30, 2020 and December 31, 2019: Right of Use Assets as of June 30, 2020 Lease Type Property Group Lease ROU Accumulated Depreciation ROU, (Unaudited) Operating lease - Rental - 1 $ 491,853 $ (143,405 ) $ 348,448 Total 1 $ 491,853 $ (143,405 ) $ 348,448 Right of Use Assets as of December 31, 2019 Lease Type Property Group Lease ROU Accumulated Depreciation ROU, Financing lease B 1 $ 61,261 $ (60,166 ) $ 1,095 Operating lease - Rental - 2 564,865 (81,782 ) 483,083 Total 3 $ 626,126 $ (141,948 ) $ 484,178 |
Bank Loans Payable (Tables)
Bank Loans Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable | The following table sets forth the Company’s loans payable as of June 30, 2020 and December 31, 2019: June 30, December 31, Harbin Bank Loans 2020 2019 (Unaudited) Interest at 5.88 per annum, payable 07/18/2027 $ 54,633,609 $ 55,519,644 Interest at 5.88 per annum, payable 07/19/2024 4,038,706 4,104,206 Interest at 6.50% per annum, payable 12/20/2018-In default 3,251,158 3,303,885 Interest at 6.50% per annum, payable 09/27/2019-In default 2,812,959 2,858,579 Interest at 6.50% per annum, payable 03/11/2020-In default 1,447,474 1,470,948 Paycheck Protection Program (“PPP”) Loan 114,970 - Total Principal 66,298,876 67,257,262 Less: unamortized debt issuance cost (303,604 ) (335,849 ) Total Bank Loans Payable, net $ 65,995,272 $ 66,921,413 |
Schedule of Debt Maturity of Outstanding Bank Loan | As of June 30, 2020, scheduled maturities of the Company’s outstanding bank loans were as follows: Twelve months ending June 30, (Unaudited) 2021 $ 7,104,086 2022 1,036,968 2023 1,036,968 2024 1,036,968 2025 1,036,967 Thereafter 54,919,949 Total debt maturities 66,183,906 Less: unamortized debt issuance costs (303,604 ) Plus: PPP loan 114,970 Total debt obligations $ 65,995,272 |
Property Financing Agreements_2
Property Financing Agreements Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property Financing Agreements Payable | |
Schedule of Detailed Information on Property Financing Agreement Payable | Property financing agreements payable consists of the following as of June 30, 2020 and December 31, 2019. June 30, December 31, (Unaudited) Buy-back financing agreements - Group B properties $ 42,010,214 $ 42,680,410 SML financing agreements - group C properties * 30,951,309 34,802,880 Less: unamortized SML financing cost (18,509 ) Total property financing agreements, net $ 72,961,523 $ 77,464,781 * includes amount of lease-back payables transferred to SML plus accrued interest |
Schedule of Property Buy-back Financing Agreements Payable | Detailed information on property buy-back financing agreements payable in group B as of June 30, 2020 and December 31, 2019 as follows. Units Square Feet Selling Price Buy-Back Price Property Financing Agreements Payable (Unaudited) June 30, 2020 Effective agreements 4 1,625 $ 444,757 $ 605,606 $ 588,856 Past due agreements 491 128,769 36,753,479 41,423,208 41,421,358 Total financing agreements 495 130,394 $ 37,198,236 $ 42,028,814 $ 42,010,214 December 31, 2019 Effective agreements 5 1,948 $ 533,965 $ 713,740 $ 686,960 Past due agreements 490 128,446 37,267,543 41,996,688 41,993,450 Total financing agreements 495 130,394 $ 37,801,508 $ 42,710,428 $ 42,680,410 |
Schedule of Maturity for Financing Agreement Payable | Following table set forth the expiration of buy-back options (Group B properties) and the buy-back amount. Future Expiration Units Buy-Back Amount (Unaudited) Past due as of 06/302020 491 $ 41,423,208 6/30/2021 2 356,483 6/30/2022 2 249,123 Total 495 $ 42,028,814 |
Schedule of Financing Agreements | Amounts under the SML Agreement as of June 30, 2020 and December 31, 2019 consist of following: June 30, December 31, (Unaudited) Buy-back related cases: including historical buy-back remaining balance $ 21,080,325 $ 25,869,672 Lease-back related cases: including historical lease-back payable remaining balance 3,956,001 4,020,158 Accrued interest payable to SML 5,914,983 4,913,051 Total SML financing agreements $ 30,951,309 $ 34,802,881 |
Account Payable and Accrued L_2
Account Payable and Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Account Payable and Accrued Liabilities | Accounts payable and accrued liabilities consist of the following: June 30, December 31, (Unaudited) Accounts payable $ 4,505,552 $ 3,461,758 Wages and employee benefits payable 599,078 679,189 Taxes payable* 1,035,621 806,380 VAT payable 910,684 745,935 Bank loan interest payable 5,181,432 3,245,679 Total accounts payable and accrued liabilities $ 12,232,367 $ 8,938,941 * Taxes payable consist of the following: June 30, December 31, (Unaudited) Individual income taxes $ 24,608 $ 27,150 Business taxes 187,825 169,336 Property and land use taxes 383,441 269,646 Tax penalties 336,643 247,732 Other surcharge and fees 103,104 92,516 Total $ 1,035,621 $ 806,380 |
Lease Liabilities (Tables)
Lease Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of Lease Liabilities | Leases liabilities consisted of following as of June 30, 2020. Lease Type Property Group Lease Units Lease Payable (Unaudited) Financing leases D 2 17,768 Operating lease Office rent 1 361,916 Total 3 $ 379,684 Leases liabilities consisted of following as of December 31, 2019. Lease Type Property Group Lease Units Lease Payable Financing leases B 1 $ 1,637 Financing leases D 2 21,118 Operating lease Office rent 2 498,509 Total 5 $ 521,264 |
Schedule of Future Minimum Lease Payables | Future minimum lease-back payables at June 30, 2020 were as follows: For the t Lease Units* Square Feet Minimum Lease Payable (Unaudited) June 30, 2021 1 108 $ 438 June 30, 2022 - - - Total future minimum lease payable $ 438 * Lease units represent total leases during the periods |
Schedule of Operating Lease for Future Minimum Rental Payments | The future minimum rental payments are as follows: For the twelve months ending (Unaudited) June 30, 2021 $ 158,748 June 30, 2022 171,741 June 30, 2023 31,427 Total $ 361,916 |
Other Payables (Tables)
Other Payables (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Payable | Other payables consist of the following: June 30, December 31, 2020 2019 (Unaudited) Tenant deposits payable 2,390,284 2,624,528 Tenants escrow account 1,735,159 1,694,568 Guaranteed rent payable 278,435 282,950 Expired lease-back payable 5,431,553 5,529,680 Buy-back payable 4,086,077 4,152,344 Accrued liabilities for additional payable from litigation 4,666,945 4,742,632 Union, housing, heating and others 1,006,303 879,996 Total Other Payables $ 19,594,756 $ 19,906,698 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Loan Payable to Related Party | Loan payable to related party consists of following as of June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 (Unaudited) Loan payable to DVDC $ 10,425,760 $ 10,594,843 Due to related individual including major shareholder 1,956,818 1,339,948 Loan payable to related parties $ 12,382,578 $ 11,934,791 |
Schedule of Loan Payable to DVDC | Loan payable to DVDC consists of following at June 30, 2020 and December 31, 2019. June 30, 2020 December 31, 2019 (Unaudited) Loan principal $ 13,200,000 $ 13,200,000 Advance payments for infrastructure construction (5,685,747 ) (5,685,747 ) Other payable to DVDC 215,136 215,136 Net loan payable to DVDC 7,729,389 7,729,389 Foreign exchange effect 2,696,371 2,865,454 Net loan payable to DVDC $ 10,425,760 $ 10,594,843 |
Schedule of Loan, Repayments and Accrued Interest to Sino Pride | Loans, repayments and accrued interest payable to Sino Pride as of June 30, 2020 are as followed: (Unaudited) Loan Payable to Sino Pride Loan balance at December 31, 2018 $ 13,503,748 Repayment in 2018 (200,000 ) Repayment in 2019 - Repayment in the six months ended June 30, 2020 - Loan balance at June 30, 2020 $ 13,303,748 Interest Payable to Sino Pride Interest payable at 12/31/2017 $ 7,451,973 Accrued interest in 2018 1,079,968 Accrued interest in 2019 1,079,083 Interest payable at December 31, 2019 9,611,024 Accrued interest in the six months ended June 30, 2020 539,540 Interest payable at June 30, 2020 $ 10,150,564 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets | At June 30, 2020 and December 31, 2019, deferred tax assets consisted of: June 30, December 31, 2020 2019 (Unaudited) Net operating loss carryforwards Foreign operations $ 15,761,137 $ 13,366,178 US operations 700,439 560,079 Valuation allowance (16,461,576 ) (13,926,257 ) Deferred tax assets - net $ - $ - |
Schedule of Provisions for Income Taxes | The provision for income taxes for the six months ended June 30, 2020 and 2019 are summarized as follows: June 30, June 30, 2020 2019 (Unaudited) Current $ - $ - Deferred 1,037,152 1,815,795 Change in valuation allowance (1,037,152 ) (1,815,795 ) Total $ - $ - |
Noncontrolling Interest (Tables
Noncontrolling Interest (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Schedule of Noncontrolling Interest | Non-controlling interest consisted of the following as of June 30, 2020 and December 31, 2019: June 30, 2019 December 31, 2019 (Unaudited) Noncontrolling interest at beginning of the period $ (43,033,931 ) $ (42,242,097 ) Net loss (334,132 ) (1,495,208 ) Foreign currency translation adjustment (137,015) 436,517 Noncontrolling interest at end of the period $ (43,505,078 ) $ (43,300,788 ) |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Schedule of Claims of Lawsuits | Claims of Lawsuits as of August 10, 2020 Store Unit Square Feet Claimed Amount (Unaudited) Property buy-back related issues 242 51,870 $ 20,052,852 Leases and lease back related issues 244 47,721 2,910,003 Other issues 97 5,348 2,136,164 Total 583 104,939 $ 25,099,019 |
Schedule of Settlement of Cases | As of August 10, 2020, the Company settled the following cases. Total Resolved Cases (Unaudited) Property buy-back related issues 239 Leases payment related issues 243 Other issues 83 Total resolved cases 565 |
Organization and Segment Info_2
Organization and Segment Information (Details Narrative) | Sep. 04, 2017USD ($)shares | Nov. 30, 2016USD ($)shares | Jun. 30, 2017 | Jun. 30, 2020 | Jun. 06, 2018 | Sep. 04, 2017HKD ($) | Sep. 12, 2000 |
Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | |||||||
Number of shares acquired | shares | 30,000,000 | ||||||
Business acquired consideration transferred, description | HK$ 1 (approximately $0.13) from Iven | ||||||
Alex Brown [Member] | |||||||
Equity ownership interest, percentage | 100.00% | ||||||
Mr. Brown. Iven [Member] | |||||||
Equity ownership interest, percentage | 100.00% | ||||||
Dalian Victory Plaza Development Co, Ltd [Member] | |||||||
Equity ownership interest, percentage | 20.00% | ||||||
Iven International Group Limited [Member] | |||||||
Equity ownership percentage description | Alex Brown beneficially owned 100% of Iven, among which, a 70% equity interest was held directly, and a 30% equity interest was held indirectly through Dalian Yiwen New Materials Technology Development Co., Ltd, a PRC entity 80% owned by Alex Brown and 20% owned by his spouse. | ||||||
Iven International Group Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | |||||||
Outstanding loan | $ 53,093,000 | ||||||
Iven International Group Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | HKD Currency [Member] | |||||||
Outstanding loan | $ 408,409,628 | ||||||
Sino Pride Development Limited [Member] | Assignment of Common Stocks and Debt Rights [Member] | |||||||
Number of shares acquired | shares | 30,000,000 | ||||||
Outstanding loan | $ 52,750,000 | ||||||
Business acquired consideration transferred, description | HK$ 1 (approximately $0.13) from VP Holding | ||||||
Sino Pride Development Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | |||||||
Outstanding loan | $ 64,208,000 | ||||||
Sino Pride Development Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | HKD Currency [Member] | |||||||
Outstanding loan | $ 493,807,633 | ||||||
Sino Pride Development Limited [Member] | |||||||
Equity ownership interest, percentage | 80.00% | ||||||
Sino Pride Development Limited [Member] | Dalian Victory Plaza Development Co, Ltd [Member] | |||||||
Equity ownership interest, percentage | 80.00% | 100.00% | |||||
Sino Pride Development Limited [Member] | Dalian Victory Business Management Co., Ltd. [Member] | |||||||
Equity ownership interest, percentage | 95.00% | 95.00% | |||||
Dalian Victory Plaza Development Co, Ltd [Member] | Dalian Victory Business Management Co., Ltd. [Member] | |||||||
Equity ownership interest, percentage | 5.00% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Lawsuits | Jun. 30, 2020CNY (¥)Lawsuits | Jun. 30, 2019USD ($) | Jun. 30, 2020CNY (¥) | Dec. 31, 2019USD ($) | |
Net loss | $ 1,656,371 | $ 5,850,810 | $ 4,080,833 | $ 7,516,742 | |||
Accumulated deficit | 207,104,990 | 207,104,990 | $ 203,808,349 | ||||
Financing agreement payable | 72,961,523 | 72,961,523 | 77,464,781 | ||||
Lease liability payable | 379,684 | 379,684 | |||||
Expired lease-back payables | 5,431,553 | 5,431,553 | 5,529,680 | ||||
Guaranteed rent payable | 278,435 | 278,435 | $ 282,950 | ||||
Buy-back of payables | 4,086,077 | $ 4,086,077 | |||||
Number of lawsuits litigation | Lawsuits | 579 | 579 | |||||
Litigation payable | $ 24,580,425 | ||||||
Accrued extra litigation charges | 4,666,944 | ||||||
Estimated financing payables on lease | 87,804,216 | 87,804,216 | |||||
Three Loans [Member] | |||||||
Loans payable | 7,500,000 | 7,500,000 | |||||
RMB [Member] | |||||||
Loans payable | ¥ | ¥ 50,000,000 | ||||||
Litigation payable | ¥ | ¥ 173,891,761 | ||||||
Harbin Bank [Member] | |||||||
Loans payable | $ 65,880,302 | $ 65,880,302 | |||||
Dalian Victory Plaza Development Co, Ltd [Member] | |||||||
Equity ownership interest, percentage | 20.00% | 20.00% | 20.00% | ||||
Dalian Victory Plaza Development Co, Ltd [Member] | March 2, 2017 to March 1, 2019 [Member] | |||||||
Equity ownership interest, percentage | 5.00% | 5.00% | 5.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Integershares | Jun. 30, 2019USD ($)shares | Dec. 31, 2019USD ($) | |
Cumulative translation adjustment and effect of exchange rate changes on cash | $ (55,938) | $ (2,242,729) | |||
Gain loss from foreign currency transactions | $ 90,381 | $ (524,372) | $ (367,986) | $ 18,358 | |
Description on rental properties | Our Victory Plaza currently has 3,173 rental units. Among these rental properties, the Company owned 433 units, 814 units were sold but with buy-back options, and 1,926 units were sold with no repurchase options. The Company will lease back some of these sold properties and rent them out to tenants. All contracts include a lease and contain information on rental income and payment term.Rental income is reported in the gross amount including rent income from our owned properties and lease-back properties. A predominately majority of the rental income comes from our owned properties and a very limited portion , estimated at less than 3%, from the lease-back properties. Existing lease-back expenses were recorded as amortization and interest expenses. Expired lease-back expenses were included in the lease-back expenses. | ||||
Lease payments description | The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset | ||||
Allowance for doubtful account | 663,841 | $ 663,841 | 632,768 | ||
Impairment loss | |||||
Amortization of debt issuance costs | 13,205 | 13,930 | $ 26,830 | $ 27,870 | |
Common stock equivalents | shares | |||||
Uncertain tax positions | |||||
Advertising expenses | $ 0 | $ 1,665 | $ 514 | $ 2,459 | |
Dalian Victory Plaza Development Co, Ltd [Member] | |||||
Non-controlling percentage | 20.00% | 20.00% | |||
Group B and C Properties [Member] | Unrelated Individuals and Entities [Member] | |||||
Percentage on ownership of rental properties | 15.00% | ||||
Group D Properties [Member] | |||||
Sublease | |||||
Number of business transactions | Integer | 2 | ||||
Group D Properties [Member] | Unrelated Individuals and Entities [Member] | |||||
Percentage on ownership of rental properties | 69.00% | ||||
Minimum [Member] | |||||
Property management fee income | $ 16 | ||||
Maximum [Member] | |||||
Property management fee income | $ 19 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Average Exchange Rates for Converting Foreign Currencies into U.S. Dollars (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Period End [Member] | RMB [Member] | ||||
USD Exchange Rate | 7.0744 | 6.8704 | 7.0744 | 6.8704 |
Period End [Member] | HK [Member] | ||||
USD Exchange Rate | 7.7503 | 7.8090 | 7.7503 | 7.8090 |
Average [Member] | RMB [Member] | ||||
USD Exchange Rate | 7.0891 | 6.8276 | 7.0335 | 6.7871 |
Average [Member] | HK [Member] | ||||
USD Exchange Rate | 7.7512 | 7.8400 | 7.7611 | 7.8432 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Ownership of Rental Properties (Details) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Description of Property | Total properties | |
% of Total SQ Ft | 100.00% | 100.00% |
Group A Properties [Member] | ||
Description of Property | Owned with title by DVPD | |
% of Total SQ Ft | 16.00% | |
Financial Statement Presentation : Assets | Rental properties | |
Financial Statement Presentation : Liabilities | N/A | |
Group B Properties [Member] | ||
Description of Property | Sold properties with buy- back options or return is in process without paying off | |
% of Total SQ Ft | 9.00% | |
Financial Statement Presentation : Assets | Rental properties | |
Financial Statement Presentation : Liabilities | Property financing agreements payable | |
Group C Properties [Member] | ||
Description of Property | Properties with buy- back options transferred to SML in 2017 and 2018 | |
% of Total SQ Ft | 6.00% | |
Financial Statement Presentation : Assets | Rental properties | |
Financial Statement Presentation : Liabilities | Loan payable SML | |
Group D Properties [Member] | ||
Description of Property | Sold properties | |
% of Total SQ Ft | 69.00% | |
Financial Statement Presentation : Assets | N/A | |
Financial Statement Presentation : Liabilities | N/A |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets - Schedule of Prepaid Expenses and Other Assets (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Prepaid Expenses And Other Assets | ||
Supplies on hands | $ 83,641 | $ 100,156 |
Prepaid expenses | 293,991 | 331,454 |
Deposits | 88,790 | 95,224 |
Total prepaid expenses and other assets | $ 466,422 | $ 526,834 |
Rental Properties, Net (Details
Rental Properties, Net (Details Narrative) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($)ft² | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)ft² | Jun. 30, 2019USD ($) | Dec. 31, 2019ft² | |
Depreciation expenses for rental properties | $ | $ 39,184 | $ 56,756 | $ 84,341 | $ 113,426 | |
Area of rental properties, square feet | 1,480,619 | 1,480,619 | 1,480,619 | ||
Terms of land use rights | 50 years | ||||
Expiration of land use rights | The land use rights expire in May 2043 | ||||
Estimated useful life | 45 years | ||||
390Million RMB Loan [Member] | |||||
Area of rental properties, square feet | 200,747 | 200,747 | |||
Area of land | 18,650 | 18,650 | |||
Loan collateral amount | $ | $ 54,900,000 | $ 54,900,000 | |||
50Million RMB Loan [Member] | |||||
Area of rental properties, square feet | 22,098 | 22,098 | |||
Area of land | 2,053 | 2,053 | |||
Loan collateral amount | $ | $ 7,000,000 | $ 7,000,000 | |||
23Million RMB Loan [Member] | |||||
Loan collateral amount | $ | $ 3,200,000 | $ 3,200,000 | |||
SML Financing Agreement [Member] | |||||
Area of rental properties, square feet | 86,251 | 86,251 | 86,251 | ||
Area of land | 8,013 | 8,013 | 8,013 | ||
Percentage for lease | 8.00% | ||||
Group D Property [Member] | |||||
Depreciation expenses for rental properties | $ | $ 220,943 | $ 233,070 | $ 448,929 | $ 468,905 | |
Area of rental properties, square feet | 1,023,519 | 1,023,519 | |||
Area of land | 95,088 | 95,088 | |||
Percentage of rental properties | 0.69 | ||||
Group A Property [Member] | |||||
Area of rental properties, square feet | 240,455 | 240,455 | |||
Area of land | 22,339 | 22,339 | |||
Percentage of rental properties | 0.16 | ||||
Group B Property [Member] | |||||
Area of rental properties, square feet | 130,394 | 130,394 | |||
Area of land | 12,114 | 12,114 | |||
Percentage of rental properties | 0.09 |
Rental Properties, Net - Schedu
Rental Properties, Net - Schedule of Rental Properties (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($)ft²Lease | Dec. 31, 2019USD ($)ft²Lease | ||
Description of property | Total properties | ||
In Square Feet | ft² | 1,480,619 | 1,480,619 | |
% of Total Square Feet | 100.00% | 100.00% | |
Units | Lease | 3,173 | 3,173 | |
Rental properties at cost | $ 40,412,576 | $ 41,067,978 | |
Less: Accumulated depreciation | (19,868,892) | (19,733,963) | |
Rental Properties, net | $ 20,543,684 | $ 21,334,015 | |
Group A [Member] | |||
Description of property | Owned by DVPD | Owned by DVPD | |
Cost of rental property | $ 21,357,786 | $ 21,704,162 | |
In Square Feet | ft² | 240,455 | 240,455 | |
% of Total Square Feet | 16.00% | 16.00% | |
Units | Lease | 433 | 433 | |
Group B [Member] | |||
Description of property | Sold properties with buy- back options or return is in process without paying off | Sold properties with buy- back options or return is in process without paying off | |
Cost of rental property | $ 11,516,477 | $ 11,703,248 | |
In Square Feet | ft² | 130,394 | 130,394 | |
% of Total Square Feet | 9.00% | 9.00% | |
Units | Lease | 495 | 495 | |
Group C [Member] | |||
Description of property | [1] | Properties with buy- back options transferred to SML in 2017 and 2018 | Properties with buy- back options transferred to SML in 2017 and 2018 |
Cost of rental property | [1] | $ 7,538,313 | $ 7,660,568 |
In Square Feet | ft² | [1] | 86,251 | 86,251 |
% of Total Square Feet | [1] | 6.00% | 6.00% |
Units | Lease | [1] | 319 | 319 |
Group D [Member] | |||
Description of property | Sold properties without buy- back options | Sold properties without buy- back options | |
Cost of rental property | |||
In Square Feet | ft² | 1,023,519 | 1,023,519 | |
% of Total Square Feet | 69.00% | 69.00% | |
Units | Lease | 1,926 | 1,926 | |
[1] | See Note 10, Property Financing Agreement Payable |
Rental Properties, Net - Sche_2
Rental Properties, Net - Schedule of Expected Future Minimum Rents (Details) | Jun. 30, 2020USD ($) |
Rental Properties Net | |
2021 | $ 75,318 |
2022 | 78,255 |
2023 | 29,839 |
Total | $ 183,412 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 39,184 | $ 56,756 | $ 84,341 | $ 113,426 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Total properties, machinery and equipment | $ 13,290,512 | $ 13,504,534 |
Less: accumulated depreciation and amortization | (12,951,499) | (13,074,471) |
Property and equipment, net | $ 339,013 | 430,063 |
Rental Property [Member] | ||
Estimated Useful Life | 45 years | |
Total properties, machinery and equipment | $ 214,995 | 218,482 |
Office Equipment [Member] | ||
Total properties, machinery and equipment | $ 315,449 | 319,359 |
Office Equipment [Member] | Minimum [Member] | ||
Estimated Useful Life | 3 years | |
Office Equipment [Member] | Maximum [Member] | ||
Estimated Useful Life | 5 years | |
Business Machinery and Equipment [Member] | ||
Total properties, machinery and equipment | $ 2,897,610 | 2,944,603 |
Business Machinery and Equipment [Member] | Minimum [Member] | ||
Estimated Useful Life | 5 years | |
Business Machinery and Equipment [Member] | Maximum [Member] | ||
Estimated Useful Life | 10 years | |
Auto [Member] | ||
Estimated Useful Life | 5 years | |
Total properties, machinery and equipment | $ 24,182 | 24,574 |
Improvements [Member] | ||
Total properties, machinery and equipment | $ 9,838,276 | $ 9,997,516 |
Improvements [Member] | Minimum [Member] | ||
Estimated Useful Life | 5 years | |
Improvements [Member] | Maximum [Member] | ||
Estimated Useful Life | 10 years |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible asset estimated useful life | 5 years | |||
Amortization expense | $ 1,236 | $ 1,316 | $ 2,436 | $ 2,648 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - Property Management Software [Member] - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Cost | $ 25,408 | $ 25,819 |
Less: accumulated depreciation | (10,489) | (8,179) |
Intangible assets, net | $ 14,919 | $ 17,640 |
Right of Use Assets (Details Na
Right of Use Assets (Details Narrative) - USD ($) | Feb. 28, 2020 | Jun. 12, 2019 | Mar. 27, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Lease payments description | The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset | |||||||
Lease expiration date | Aug. 31, 2022 | Mar. 26, 2020 | ||||||
Security deposit | $ 85,215 | |||||||
Percentage for lease payment | 5.25% | |||||||
Lease description | 0 and 6 lease-back leases that expired | 0 and 6 lease-back leases that expired | ||||||
Amortization of ROU | $ 0 | $ 27,685 | $ 0 | $ 42,366 | ||||
Operating lease expense | 47,122 | 139,956 | 120,122 | 322,475 | ||||
Short term rental lease expense | $ 10,749 | $ 44,214 | $ 31,110 | $ 141,169 | ||||
March 1, 2020 to August 31, 2022 [Member] | ||||||||
Remaining rental expense | $ 425,000 |
Right of Use Assets - Schedule
Right of Use Assets - Schedule of Lease Liability Maturity (Details) | Jun. 30, 2020USD ($) |
2022 | $ 171,741 |
2023 | 31,427 |
Total Lease Liability Maturities | 361,916 |
Operating Lease [Member] | |
2021 | 176,516 |
2022 | 171,741 |
2023 | 31,427 |
Total Lease Liability Maturities | $ 379,684 |
Right of Use Assets - Schedul_2
Right of Use Assets - Schedule of Right of Use Assets (Details) | Jun. 30, 2020USD ($)Lease | Dec. 31, 2019USD ($)Lease |
Lease units | Lease | 1 | 3 |
ROU Assets | $ 491,853 | $ 626,126 |
Accumulated Depreciation | (143,405) | (141,948) |
ROU, Net | $ 348,448 | $ 484,178 |
Operating Leases [Member] | ||
Lease units | Lease | 1 | 2 |
ROU Assets | $ 491,853 | $ 564,865 |
Accumulated Depreciation | (143,405) | (81,782) |
ROU, Net | $ 348,448 | $ 483,083 |
Financing Lease B [Member] | ||
Lease units | Lease | 1 | |
ROU Assets | $ 61,261 | |
Accumulated Depreciation | (60,166) | |
ROU, Net | $ 1,095 |
Loan and Interest Receivable (D
Loan and Interest Receivable (Details Narrative) | Jun. 28, 2018USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2018 | Jun. 30, 2020USD ($) | Jun. 30, 2020CNY (¥) | Jun. 30, 2019USD ($) | Jun. 30, 2019CNY (¥) | Jun. 28, 2018CNY (¥) |
Repayment of loans | $ 1,972,000 | |||||||
Reserve allowance | 2,864,755 | |||||||
RMB [Member] | ||||||||
Repayment of loans | ¥ | ¥ 14,000,000 | |||||||
Reserve allowance | 18,144,100 | |||||||
Zhong Ke Chuang Zhan Investment, Ltd [Member] | ||||||||
Line of credit principal amount | 3,100,000 | |||||||
Line of credit accrued interest | $ 1,200,000 | |||||||
RMB 50M Loan [Member] | Zhong Ke Chuang Zhan Investment, Ltd [Member] | ||||||||
Maximum borrowed loan | $ 7,200,000 | $ 10,800,000 | $ 10,800,000 | |||||
Loan maturity date | Jun. 30, 2019 | Sep. 30, 2020 | ||||||
Loan interest rate | 2.00% | |||||||
RMB 50M Loan [Member] | Zhong Ke Chuang Zhan Investment, Ltd [Member] | October 1, 2018 to September 30, 2019 [Member] | ||||||||
Loan interest rate | 0.70% | |||||||
RMB 50M Loan [Member] | Zhong Ke Chuang Zhan Investment, Ltd [Member] | RMB [Member] | ||||||||
Maximum borrowed loan | ¥ | ¥ 50,000,000 | |||||||
RMB 50M Loan [Member] | Zhong Ke Chuang Zhan Investment, Ltd [Member] | RMB [Member] | Minimum [Member] | ||||||||
Maximum borrowed loan | ¥ | ¥ 50,000,000 | |||||||
RMB 50M Loan [Member] | Zhong Ke Chuang Zhan Investment, Ltd [Member] | RMB [Member] | Maximum [Member] | ||||||||
Maximum borrowed loan | ¥ | ¥ 75,000,000 |
Bank Loans Payable (Details Nar
Bank Loans Payable (Details Narrative) | Mar. 26, 2019USD ($) | Sep. 27, 2018USD ($) | Sep. 27, 2018CNY (¥) | Jan. 19, 2018USD ($) | Dec. 28, 2017USD ($) | Aug. 17, 2017 | Oct. 24, 2015 | Mar. 24, 2015USD ($) | Jul. 20, 2014USD ($) | Jul. 20, 2014CNY (¥) | Jun. 30, 2020USD ($)ft² | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)ft² | Jun. 30, 2020CNY (¥) | Jun. 30, 2019USD ($) | Jun. 30, 2020CNY (¥)ft² | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 19, 2018CNY (¥) | Dec. 28, 2017CNY (¥) | Dec. 21, 2017USD ($) | Dec. 21, 2017CNY (¥) | Mar. 24, 2015CNY (¥) | Jul. 20, 2014CNY (¥) |
Bank loans payable | $ 65,995,272 | $ 65,995,272 | $ 66,921,413 | |||||||||||||||||||||
Debt effective interest rate | 6.50% | 6.50% | ||||||||||||||||||||||
Repayment of loans | 1,972,000 | |||||||||||||||||||||||
Long term borrowing | $ 66,183,906 | 66,183,906 | ||||||||||||||||||||||
Interest expense | 988,295 | $ 1,055,274 | 2,010,258 | $ 2,098,494 | ||||||||||||||||||||
Short-Terms Loans [Member] | ||||||||||||||||||||||||
Debt penalty | 757,000 | |||||||||||||||||||||||
RMB [Member] | ||||||||||||||||||||||||
Repayment of loans | ¥ | ¥ 14,000,000 | |||||||||||||||||||||||
RMB [Member] | Short-Terms Loans [Member] | ||||||||||||||||||||||||
Repayment of loans | ¥ | 23,000,000 | |||||||||||||||||||||||
RMB [Member] | Short-Terms Loans One [Member] | ||||||||||||||||||||||||
Repayment of loans | ¥ | 19,900,000 | |||||||||||||||||||||||
RMB [Member] | Short-Terms Loans Two [Member] | ||||||||||||||||||||||||
Repayment of loans | ¥ | ¥ 10,240,000 | |||||||||||||||||||||||
390Million RMB Loan [Member] | ||||||||||||||||||||||||
Loan term | 5 years | 10 years | 10 years | |||||||||||||||||||||
Bank loans payable | $ 55,128,350 | |||||||||||||||||||||||
Loan interest float rate | 120.00% | 120.00% | ||||||||||||||||||||||
Loan interest rate per annum | 4.90% | |||||||||||||||||||||||
Loan maturity date | Jun. 19, 2024 | Jun. 19, 2024 | ||||||||||||||||||||||
Repayment of loans | $ 70,677 | |||||||||||||||||||||||
390Million RMB Loan [Member] | RMB [Member] | ||||||||||||||||||||||||
Bank loans payable | ¥ | ¥ 390,000,000 | |||||||||||||||||||||||
RMB 390Million Loan [Member] | ||||||||||||||||||||||||
Bank loans payable | $ 54,633,609 | $ 54,633,609 | 55,519,644 | |||||||||||||||||||||
Debt effective interest rate | 5.91% | 5.91% | 5.88% | |||||||||||||||||||||
Loan maturity date, description | (i) to extend the maturity date of the Loan from July 19, 2024 to July 18, 2027; (ii) to extend the initial monthly repayment date from August 20, 2017 to July 20, 2020, however, during the extended period | |||||||||||||||||||||||
Area of land | ft² | 18,650 | 18,650 | 18,650 | |||||||||||||||||||||
Rental properties owned by the company, square feet | ft² | 200,747 | 200,747 | 200,747 | |||||||||||||||||||||
Percentage of damages | 20.00% | 20.00% | 20.00% | |||||||||||||||||||||
Accrued principle and interest amount | $ 4,600,000 | |||||||||||||||||||||||
RMB 390Million Loan [Member] | RMB [Member] | ||||||||||||||||||||||||
Bank loans payable | ¥ | ¥ 386,500,000 | ¥ 386,500,000 | ||||||||||||||||||||||
Repayment of loans | ¥ | ¥ 500,000 | |||||||||||||||||||||||
RMB 50Million Loan [Member] | ||||||||||||||||||||||||
Loan term | 5 years | |||||||||||||||||||||||
Bank loans payable | $ 7,067,737 | $ 4,038,706 | $ 4,038,706 | $ 4,104,206 | ||||||||||||||||||||
Loan interest float rate | 120.00% | 120.00% | ||||||||||||||||||||||
Loan interest rate per annum | 4.90% | |||||||||||||||||||||||
Debt effective interest rate | 5.88% | 5.88% | 5.92% | |||||||||||||||||||||
Loan maturity date | Jul. 19, 2024 | |||||||||||||||||||||||
Loan maturity date, description | In additional to the RMB 390M Loan and RMB 50M Loan, the Company has failed to make payments to three short-term loans, including the RMB 23M Loan, the RMB 19.9M Loan, and the RMB 10.24M Loan (collectively, the "Liquidity Loan Balance Due"). As of the date of this Quarterly Report, the Short-Terms Loans have been expired while the Company has not made the corresponding payment. The Bank and the Company are currently discussing potential grant to convert the principal and interests due, including the RMB 390M Loan Balance Due, the RMB 50M Loan Balance Due, and the Liquidity Loan Balance Due into a new loan and an additional liquidity loans in an amount of RMB 50 million (collectively, the "Refinancing Loans"). The collateral for the potential RMB 50 million loan will be the remaining values of same collateral for the RMB 390M Loan and RMB 50M Loan but ranking junior to the RMB 390MB Loan and RMB 50M Loan. In addition, the Company has been negotiating with the Bank for a waiver of the penalty for late payment of related loan interest (the "Penalty Waiver"). The Company has already submitted the application for the Refinancing Loans and request for the Penalty Waiver to the Bank and is awaiting the Bank's approval. However, there is no assurance that such Refinancing Loans or Penalty Waiver will be approved by the Bank. | In additional to the RMB 390M Loan and RMB 50M Loan, the Company has failed to make payments to three short-term loans, including the RMB 23M Loan, the RMB 19.9M Loan, and the RMB 10.24M Loan (collectively, the "Liquidity Loan Balance Due"). As of the date of this Quarterly Report, the Short-Terms Loans have been expired while the Company has not made the corresponding payment. The Bank and the Company are currently discussing potential grant to convert the principal and interests due, including the RMB 390M Loan Balance Due, the RMB 50M Loan Balance Due, and the Liquidity Loan Balance Due into a new loan and an additional liquidity loans in an amount of RMB 50 million (collectively, the "Refinancing Loans"). The collateral for the potential RMB 50 million loan will be the remaining values of same collateral for the RMB 390M Loan and RMB 50M Loan but ranking junior to the RMB 390MB Loan and RMB 50M Loan. In addition, the Company has been negotiating with the Bank for a waiver of the penalty for late payment of related loan interest (the "Penalty Waiver"). The Company has already submitted the application for the Refinancing Loans and request for the Penalty Waiver to the Bank and is awaiting the Bank's approval. However, there is no assurance that such Refinancing Loans or Penalty Waiver will be approved by the Bank. | ||||||||||||||||||||||
Area of land | ft² | 2,053 | 2,053 | 2,053 | |||||||||||||||||||||
Rental properties owned by the company, square feet | ft² | 22,098 | 22,098 | 22,098 | |||||||||||||||||||||
Percentage of damages | 20.00% | 20.00% | 20.00% | |||||||||||||||||||||
Accrued principle and interest amount | $ 1,200,000 | |||||||||||||||||||||||
RMB 50Million Loan [Member] | RMB [Member] | ||||||||||||||||||||||||
Bank loans payable | ¥ | ¥ 28,571,429 | ¥ 28,571,429 | ¥ 50,000,000 | |||||||||||||||||||||
RMB 23Million Loan [Member] | ||||||||||||||||||||||||
Loan term | 1 year | |||||||||||||||||||||||
Bank loans payable | $ 1,554,902 | $ 3,251,159 | ||||||||||||||||||||||
Loan interest float rate | 6.50% | 6.50% | ||||||||||||||||||||||
Loan maturity date | Dec. 20, 2018 | |||||||||||||||||||||||
Loan maturity date, description | DVPD may choose to extend the term of the loan after obtaining prior written consent from the Bank at least 15 days prior to the maturity date | The term of the loan was one year and was due on December 20, 2018. | ||||||||||||||||||||||
Long term borrowing | $ 1,696,257 | |||||||||||||||||||||||
RMB 23Million Loan [Member] | RMB [Member] | ||||||||||||||||||||||||
Bank loans payable | ¥ | ¥ 11,000,000 | ¥ 23,000,000 | ||||||||||||||||||||||
Long term borrowing | ¥ | ¥ 12,000,000 | |||||||||||||||||||||||
RMB 19.9Million Loan [Member] | Harbin Bank [Member] | ||||||||||||||||||||||||
Loan interest rate per annum | 6.50% | 6.50% | ||||||||||||||||||||||
Loan maturity date | Sep. 12, 2019 | Sep. 12, 2019 | ||||||||||||||||||||||
Proceeds from short term loan | $ 2,812,959 | |||||||||||||||||||||||
RMB 19.9Million Loan [Member] | RMB [Member] | Harbin Bank [Member] | ||||||||||||||||||||||||
Proceeds from short term loan | ¥ | ¥ 19,900,000 | |||||||||||||||||||||||
RMB 10.24Million Loan [Member] | Harbin Bank [Member] | ||||||||||||||||||||||||
Loan interest rate per annum | 6.50% | |||||||||||||||||||||||
Loan maturity date | Mar. 11, 2020 | |||||||||||||||||||||||
Loan maturity date, description | On March 26, 2019, DVPD borrowed $1,447,473 (RMB 10,240,000 translated at June 30, 2020 exchange rate) in a short-term loan from Harbin Bank (the "RMB 10.24 million Loan", together with the RMB 23 million Loan and RMB 19.9 million Loan, the "Liquidity Loan Balance Due"). The loan requires interest at 6.50% per annum and expires on March 11, 2020. | |||||||||||||||||||||||
Proceeds from short term loan | $ 1,447,473 | |||||||||||||||||||||||
RMB 10.24Million Loan [Member] | RMB [Member] | Harbin Bank [Member] | ||||||||||||||||||||||||
Proceeds from short term loan | ¥ | ¥ 10,240,000 |
Bank Loans Payable - Schedule o
Bank Loans Payable - Schedule of Loans Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Total Principal | $ 66,298,876 | $ 67,257,262 |
Less: unamortized debt issuance cost | (303,604) | (335,849) |
Total Bank Loans Payable, net | 65,995,272 | 66,921,413 |
Interest at 5.88% Per Annum, Payable 07/18/2027 [Member] | ||
Total Principal | 54,633,609 | 55,519,644 |
Interest at 5.88% Per Annum, Payable 07/19/2024 [Member] | ||
Total Principal | 4,038,706 | 4,104,206 |
Interest at 6.50% Per Annum, Payable 12/20/2018 - In Default [Member] | ||
Total Principal | 3,251,158 | 3,303,885 |
Interest at 6.50% Per Annum, Payable 09/27/2019 - In Default [Member] | ||
Total Principal | 2,812,959 | 2,858,579 |
Interest at 6.50% Per Annum, Payable 03/11/2020 In Default [Member] | ||
Total Principal | 1,447,474 | 1,470,948 |
Paycheck Protection Program Loan [Member] | ||
Total Principal | $ 114,970 |
Bank Loans Payable - Schedule_2
Bank Loans Payable - Schedule of Loans Payable (Details) (Parenthetical) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Interest at 5.88% Per Annum, Payable 07/18/2027 [Member] | ||
Loans payable interest rate percentage | 5.88% | 5.46% |
Interest at 5.88% Per Annum, Payable 07/19/2024 [Member] | ||
Loans payable interest rate percentage | 5.88% | |
Interest at 6.50% Per Annum, Payable 12/20/2018 - In Default [Member] | ||
Loans payable interest rate percentage | 6.50% | 6.50% |
Loans payable, date | Dec. 20, 2018 | Dec. 20, 2018 |
Interest at 6.50% Per Annum, Payable 09/27/2019 - In Default [Member] | ||
Loans payable interest rate percentage | 6.50% | 6.50% |
Loans payable, date | Sep. 27, 2019 | Sep. 27, 2019 |
Interest at 6.50% Per Annum, Payable 03/11/2020 In Default [Member] | ||
Loans payable interest rate percentage | 6.50% | 6.50% |
Interest at 5.46% Per Annum, Payable 07/18/2027 [Member] | ||
Loans payable, date | Jul. 18, 2027 | Jul. 18, 2027 |
Interest at 7.08% Per Annum, Payable 07/19/2024 [Member] | ||
Loans payable, date | Jul. 19, 2024 | Jul. 19, 2024 |
Interest at 6.50% per annum, payable 03/11/2020 [Member] | ||
Loans payable, date | Mar. 11, 2020 | Mar. 11, 2020 |
Interest at 5.88% Per Annum, Payable 07/19/2024 [Member] | ||
Loans payable interest rate percentage | 7.08% |
Bank Loans Payable - Schedule_3
Bank Loans Payable - Schedule of Debt Maturity of Outstanding Bank Loan (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
2021 | $ 7,104,086 | |
2022 | 1,036,968 | |
2023 | 1,036,968 | |
2024 | 1,036,968 | |
2025 | 1,036,967 | |
Thereafter | 54,919,949 | |
Total debt maturities | 66,183,906 | |
Less: unamortized debt issuance costs | (303,604) | $ (335,849) |
Plus: PPP loan | 114,970 | |
Total debt obligations | $ 65,995,272 | $ 66,921,413 |
Property Financing Agreements_3
Property Financing Agreements Payable (Details Narrative) | 6 Months Ended | |||
Jun. 30, 2020USD ($)ft²Unitsm | Jun. 30, 2020CNY (¥)Units | Dec. 31, 2019USD ($) | Dec. 29, 2017 | |
Other payable | $ 19,594,756 | $ 19,906,698 | ||
Dalian Sheng Ma Lin Trading Ltd [Member] | ||||
Recorded reduction value of property financing | 4,376,492 | |||
Buy-back Payable [Member] | ||||
Other payable | $ 4,086,077 | $ 4,152,344 | ||
RMB [Member] | Dalian Sheng Ma Lin Trading Ltd [Member] | ||||
Recorded reduction value of property financing | ¥ | ¥ 30,961,059 | |||
Buy-Back Financing Agreements [Member] | Unrelated Individuals [Member] | ||||
Rental properties owned by the company, square feet | ft² | 216,230 | |||
Rental properties owned by the company, square meters | ft² | 20,127 | |||
Percentage of rental properties | 0.15 | 0.15 | ||
Description on vesting period | The date of buy-back options ranged from 2014 to 2018. | The date of buy-back options ranged from 2014 to 2018. | ||
Buy-Back Financing Agreements [Member] | Owners of the Property [Member] | ||||
Recorded reduction value of property financing | $ 3,474,503 | |||
Buy-Back Financing Agreements [Member] | Owners of the Property [Member] | RMB [Member] | ||||
Recorded reduction value of property financing | ¥ | ¥ 24,197,759 | |||
Strategy Cooperation Agreement [Member] | ||||
Rental properties owned by the company, square feet | ft² | 86,251 | |||
Percentage of interest agreed to pay | 8.00% | |||
Number of properties sold | Units | 319 | 319 | ||
Rental properties owned by the company, meters | m | 8,013 |
Property Financing Agreements_4
Property Financing Agreements Payable - Schedule of Detailed Information on Property Financing Agreement Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | |
Total property financing agreements, net | $ 72,961,523 | $ 77,464,781 | |
Buy Back Financing Agreements - Group B Properties [Member] | |||
Total property financing agreements, net | 42,010,214 | 42,680,410 | |
SML Financing Agreements - Group C Properties [Member] | |||
Total property financing agreements, net | [1] | $ 30,951,309 | 34,802,880 |
Less: Unamortized SML Financing Cost [Member] | |||
Total property financing agreements, net | $ (18,509) | ||
[1] | includes amount of lease-back payables transferred to SML plus accrued interest |
Property Financing Agreements_5
Property Financing Agreements Payable - Schedule of Property Buy-back Financing Agreements Payable (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)ft²UnitsLease | Dec. 31, 2019USD ($)ft²Units | |
Units | Lease | 495 | |
Buy-Back Price | $ 42,028,814 | |
Effective Agreements [Member] | ||
Units | Units | 4 | 5 |
Square Feet | ft² | 1,625 | 1,948 |
Selling Price | $ 444,757 | $ 533,965 |
Buy-Back Price | 605,606 | 713,740 |
Property Financing Agreement Payable | $ 588,856 | $ 686,960 |
Past Due Agreements [Member] | ||
Units | Units | 491 | 490 |
Square Feet | ft² | 128,769 | 128,446 |
Selling Price | $ 36,753,479 | $ 37,267,543 |
Buy-Back Price | 41,423,208 | 41,996,688 |
Property Financing Agreement Payable | $ 41,421,358 | $ 41,993,450 |
Financing Agreements [Member] | ||
Units | Units | 495 | 495 |
Square Feet | ft² | 130,394 | 130,394 |
Selling Price | $ 37,198,236 | $ 37,801,508 |
Buy-Back Price | 42,028,814 | 42,710,428 |
Property Financing Agreement Payable | $ 42,010,214 | $ 42,680,410 |
Property Financing Agreements_6
Property Financing Agreements Payable - Schedule of Maturity for Financing Agreement Payable (Details) | 6 Months Ended |
Jun. 30, 2020USD ($)Lease | |
Units | Lease | 495 |
Buy-back amount | $ | $ 42,028,814 |
Past Due as of 6/30/2020 [Member] | |
Units | Lease | 491 |
Buy-back amount | $ | $ 41,423,208 |
6/30/2021 [Member] | |
Units | Lease | 2 |
Buy-back amount | $ | $ 356,483 |
6/30/2022 [Member] | |
Units | Lease | 2 |
Buy-back amount | $ | $ 249,123 |
Property Financing Agreements_7
Property Financing Agreements Payable - Schedule of Financing Agreements (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Property Financing Agreements Payable | ||
Buy-back related cases: including historical buy-back remaining balance | $ 21,080,325 | $ 25,869,672 |
Lease-back related cases: including historical lease-back payable remaining balance | 3,956,001 | 4,020,158 |
Accrued interest payable to SML | 5,914,983 | 4,913,051 |
Total SML financing agreements | $ 30,951,309 | $ 34,802,881 |
Account Payable and Accrued L_3
Account Payable and Accrued Liabilities (Details Narrative) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Tax payables | $ 1,035,621 | $ 806,380 |
Accrued tax penalties payable | $ 336,643 | $ 247,732 |
Account Payable and Accrued L_4
Account Payable and Accrued Liabilities - Schedule of Account Payable and Accrued Liabilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 4,505,552 | $ 3,461,758 |
Wages and employee benefits payable | 599,078 | 679,189 |
Taxes payable | 1,035,621 | 806,380 |
VAT payable | 910,684 | 745,935 |
Bank loan interest payable | 5,181,432 | 3,245,679 |
Total accounts payable and accrued liabilities | $ 12,232,367 | $ 8,938,941 |
Account Payable and Accrued L_5
Account Payable and Accrued Liabilities - Schedule of Account Payable and Accrued Liabilities (Details) (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Individual income taxes | $ 24,608 | $ 27,150 |
Business taxes | 187,825 | 169,336 |
Property and land use taxes | 383,441 | 269,646 |
Tax penalties | 336,643 | 247,732 |
Other surcharges and fees | 103,104 | 92,516 |
Total | $ 1,035,621 | $ 806,380 |
Lease Liabilities (Details Narr
Lease Liabilities (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Lease-backs expired, description | no lease-back leases expired | 5 lease-back leases expired | |||
Accumulated unpaid lease-back liabilities lease-back liabilities | $ 5,431,553 | $ 5,431,553 | $ 5,529,680 | ||
Finance lease payments | |||||
Operating lease payments | $ 49,996 | $ 78,517 | $ 92,537 | $ 156,972 | |
Finance lease weighted average remaining lease terms | 1 year | 1 year | 1 year | ||
Operating lease weighted average remaining lease terms | 1 year | 1 year | |||
Lease period | 10 years | ||||
Amortization of ROU expense | $ 0 | $ 27,685 | $ 0 | $ 42,366 | |
Financing lease, interest expense | 0 | 1,170 | 0 | 1,973 | |
Short term lease rent expense | 10,749 | 44,214 | 31,110 | 141,169 | |
Operating lease expense | $ 47,122 | $ 139,956 | $ 120,122 | 322,475 | |
Operating lease, description | New York's office lease expires on August 31, 2022. | ||||
Financing Leases [Member] | |||||
Supplemental noncash lease liabilities | $ 17,768 | $ 22,755 | |||
Operating Leases [Member] | |||||
Supplemental noncash lease liabilities | $ 361,916 | $ 498,509 | |||
Operating Lease Agreement [Member] | |||||
Operating lease, description | New York's office lease expires on August 31, 2022. |
Lease Liabilities - Schedule of
Lease Liabilities - Schedule of Lease Liabilities (Details) | Jun. 30, 2020USD ($)Lease | Dec. 31, 2019USD ($)Lease |
Lease units | Lease | 3 | 5 |
Total Lease Payable | $ | $ 379,684 | $ 521,264 |
Financing Leases [Member] | Property Group D [Member] | ||
Lease units | Lease | 2 | 2 |
Total Lease Payable | $ | $ 17,768 | $ 21,118 |
Financing Leases [Member] | Property Group B [Member] | ||
Lease units | Lease | 1 | |
Total Lease Payable | $ | $ 1,637 | |
Operating Lease [Member] | Office Rent [Member] | ||
Lease units | Lease | 1 | 2 |
Total Lease Payable | $ | $ 361,916 | $ 498,509 |
Lease Liabilities - Schedule _2
Lease Liabilities - Schedule of Future Minimum Lease Payables (Details) | Jun. 30, 2020USD ($)ft²Lease | |
Leases [Abstract] | ||
Lease Units, June 30, 2021 | Lease | 1 | [1] |
Lease Units, June 30, 2022 | Lease | [1] | |
Minimum Lease Payable, Square Feet, June 30, 2021 | ft² | 108 | |
Minimum Lease Payable, Square Feet, June 30, 2022 | ft² | ||
Minimum Lease Payable, June 30, 2021 | $ 438 | |
Minimum Lease Payable, June 30, 2022 | ||
Total future minimum lease payable | $ 438 | |
[1] | Lease units represent total leases during the periods |
Lease Liabilities - Schedule _3
Lease Liabilities - Schedule of Operating Lease for Future Minimum Rental Payments (Details) | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
June 30, 2021 | $ 158,748 |
June 30, 2022 | 171,741 |
June 30, 2023 | 31,427 |
Total Lease Liability Maturities | $ 361,916 |
Other Payables - Schedule of Ot
Other Payables - Schedule of Other Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Tenant deposits payable | $ 2,390,284 | $ 2,624,528 |
Tenants escrow account | 1,735,159 | 1,694,568 |
Guaranteed rent payable | 278,435 | 282,950 |
Expired lease-back payable | 5,431,553 | 5,529,680 |
Buy-back payable | 4,086,077 | 4,152,344 |
Accrued liabilities for additional payable from litigation | 4,666,945 | 4,742,632 |
Union, housing, heating and others | 1,006,303 | 879,996 |
Total Other Payables | $ 19,594,756 | $ 19,906,698 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | Sep. 04, 2017USD ($)$ / sharesshares | Nov. 30, 2016$ / sharesshares | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2020CNY (¥) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2008USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2017USD ($) | Sep. 04, 2017HKD ($) | Jun. 30, 2017 | Dec. 25, 2000USD ($) | Dec. 25, 2000CNY (¥) |
Right of use assets contribution | $ 348,448 | $ 348,448 | $ 484,178 | ||||||||||||||
Loan payable to related parties | 12,382,578 | 12,382,578 | 11,934,791 | ||||||||||||||
Accrued interest expense - related parties | 132,259 | $ 134,180 | 266,393 | $ 268,376 | |||||||||||||
Repayments of loans | 1,972,000 | ||||||||||||||||
Prime Rate [Member] | |||||||||||||||||
Interest expense | 1,100,000 | 1,100,000 | |||||||||||||||
Shareholder [Member] | |||||||||||||||||
Loan payable to related parties | $ 66,396,293 | $ 66,396,293 | 65,931,644 | ||||||||||||||
Loan interest rate | 3.25% | 3.25% | |||||||||||||||
Mr. Alex Brown [Member] | |||||||||||||||||
Advanced from related party | $ 673,578 | 949,420 | |||||||||||||||
RMB [Member] | |||||||||||||||||
Repayments of loans | ¥ | ¥ 14,000,000 | ||||||||||||||||
One Related Individual [Member] | |||||||||||||||||
Loan payable to related parties | $ 1,956,818 | 1,956,818 | 1,339,948 | ||||||||||||||
Sino Pride Development Limited [Member] | |||||||||||||||||
Loan payable to related parties | 13,303,748 | 13,303,748 | $ 13,503,748 | ||||||||||||||
Loan interest rate | 8.00% | ||||||||||||||||
Accrued interest expense - related parties | 535,374 | 540,713 | |||||||||||||||
Accrued interest payable to related party | $ 10,150,564 | 10,150,564 | 9,611,024 | $ 7,451,973 | |||||||||||||
Received loans from related party | $ 38,683,297 | ||||||||||||||||
Repayments of loans | $ 200,000 | $ 4,068,630 | $ 20,710,919 | ||||||||||||||
Iven International Group Limited [Member] | Sino Pride Development Limited [Member] | Assignment of Common Stocks and Debt Rights [Member] | |||||||||||||||||
Stock issued during the period | shares | 30,000,000 | ||||||||||||||||
Nominal consideration | $ / shares | $ 0.13 | ||||||||||||||||
Iven International Group Limited [Member] | HK [Member] | Sino Pride Development Limited [Member] | Assignment of Common Stocks and Debt Rights [Member] | |||||||||||||||||
Nominal consideration | $ / shares | $ 1 | ||||||||||||||||
Victory Commercial Investment Ltd. [Member] | Sino Pride Development Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | |||||||||||||||||
Stock issued during the period | shares | 30,000,000 | ||||||||||||||||
Assumed shareholder debt and loan rights | $ 64,208,000 | ||||||||||||||||
Victory Commercial Investment Ltd. [Member] | Shareholder [Member] | Sino Pride Development Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | |||||||||||||||||
Loan payable to related parties | $ 53,093,000 | ||||||||||||||||
Nominal consideration | $ / shares | $ 0.13 | ||||||||||||||||
Victory Commercial Investment Ltd. [Member] | HK [Member] | Sino Pride Development Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | |||||||||||||||||
Assumed shareholder debt and loan rights | $ 493,807,633 | ||||||||||||||||
Victory Commercial Investment Ltd. [Member] | HK [Member] | Shareholder [Member] | Sino Pride Development Limited [Member] | Assignment of All Outstanding Shares and All Debt Right Agreement [Member] | |||||||||||||||||
Loan payable to related parties | $ 408,409,628 | ||||||||||||||||
Nominal consideration | $ / shares | $ 1 | ||||||||||||||||
Dalian Victory Plaza Development Co, Ltd [Member] | |||||||||||||||||
Non-controlling interest ownership percentage | 20.00% | 20.00% | 20.00% | ||||||||||||||
Non-controlling interest | 20.00% | 20.00% | |||||||||||||||
DVDC [Member] | |||||||||||||||||
Loan payable to related parties | $ 13,200,000 | ||||||||||||||||
Loan principal | $ 3,300,000 | ||||||||||||||||
Loan interest rate | 8.00% | 8.00% | |||||||||||||||
Accrued interest expense - related parties | $ 132,063 | $ 134,149 | $ 266,197 | $ 268,376 | |||||||||||||
Accrued interest payable to related party | 11,603,503 | 11,603,503 | $ 11,520,609 | ||||||||||||||
DVDC [Member] | RMB [Member] | |||||||||||||||||
Loan payable to related parties | ¥ | ¥ 109,356,000 | ||||||||||||||||
DVDC [Member] | Dalian Victory Plaza Development Co, Ltd [Member] | |||||||||||||||||
Registered capital form contributions | 6,800,000 | ||||||||||||||||
DVDC [Member] | Dalian Victory Plaza Development Co, Ltd [Member] | Land and Infrastructure [Member] | |||||||||||||||||
Right of use assets contribution | 20,000,000 | 20,000,000 | |||||||||||||||
Loan payable to related parties | $ 13,200,000 | $ 13,200,000 | |||||||||||||||
Loan interest rate | 25.00% | 25.00% | |||||||||||||||
Iven International Group Limited [Member] | Mr. Alex Brown [Member] | |||||||||||||||||
Non-controlling interest ownership percentage | 70.00% | ||||||||||||||||
Non-controlling interest | 100.00% | ||||||||||||||||
Iven International Group Limited [Member] | Mr. Alex Brown [Member] | China [Member] | |||||||||||||||||
Non-controlling interest | 80.00% | ||||||||||||||||
Iven International Group Limited [Member] | Mrs. Alex Brown [Member] | China [Member] | |||||||||||||||||
Non-controlling interest | 20.00% | ||||||||||||||||
Dalian Yiwen New Materials Technology Development Co., Ltd | Mr. Alex Brown [Member] | Iven International Group Limited [Member] | |||||||||||||||||
Non-controlling interest ownership percentage | 30.00% |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Loan Payable to Related Party (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Loan payable to related parties | $ 12,382,578 | $ 11,934,791 |
DVDC [Member] | ||
Loan payable to related parties | 10,425,760 | 10,594,843 |
Related Individual [Member] | ||
Loan payable to related parties | $ 1,956,818 | $ 1,339,948 |
Related Party Transactions - _2
Related Party Transactions - Schedule of Loan Payable to DVDC (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Net loan payable | $ 12,382,578 | $ 11,934,791 |
DVDC [Member] | ||
Loan principal | 13,200,000 | 13,200,000 |
Net loan payable | 10,425,760 | 10,594,843 |
DVDC [Member] | Foreign Exchange Effect [Member] | ||
Net loan payable | 2,696,371 | 2,865,454 |
DVDC [Member] | Other Payable [Member] | ||
Net loan payable | 215,136 | 215,136 |
DVDC [Member] | Infrastructure Construction [Member] | ||
Advances payable to related party | (5,685,747) | (5,685,747) |
DVDC [Member] | ||
Net loan payable | $ 7,729,389 | $ 7,729,389 |
Related Party Transactions - _3
Related Party Transactions - Schedule of Loan, Repayments and Accrued Interest to Sino Pride (Details) - USD ($) | 6 Months Ended | 12 Months Ended | 204 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2015 | Dec. 31, 2014 | |
Loan balance, beginning | $ 11,934,791 | ||||
Repayment for the period | (1,972,000) | ||||
Loan balance, ending | 12,382,578 | $ 11,934,791 | |||
Sino Pride Development Limited [Member] | |||||
Loan balance, beginning | $ 13,503,748 | ||||
Repayment for the period | (200,000) | $ (4,068,630) | $ (20,710,919) | ||
Loan balance, ending | 13,303,748 | ||||
Interest payable, beginning | 9,611,024 | 7,451,973 | |||
Accrued interest | 539,540 | 1,079,083 | 1,079,968 | ||
Interest payable, ending | $ 10,150,564 | $ 9,611,024 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Effective income tax rate | 21.00% | ||
Effective income tax rate, description | On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA"), which significantly modified U.S. corporate income tax law, was signed into law by President Trump. The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21% | ||
Operating loss carry forwards | $ 3,300,000 | $ 2,700,000 | |
Operating loss carry forward years | 20 years | ||
Change in valuation allowance increase | $ 2,535,319 | $ 1,815,795 | |
DVPD, DVBM and Sino Pride [Member] | |||
Operating loss carry forwards | $ 10,200,000 | $ 7,800,000 | |
Maximum [Member] | |||
Limitation of tax reduction for interest expense | 30.00% | ||
Limitation of tax reduction for net operating losses | 80.00% | ||
China [Member] | Foreign Tax Authority [Member] | |||
Effective income tax rate | 25.00% | ||
Hong Kong [Member] | Foreign Tax Authority [Member] | |||
Effective income tax rate | 16.50% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards, foreign operations | $ 15,761,137 | $ 13,366,178 |
Net operating loss carryforwards, US operations | 700,439 | 560,079 |
Valuation allowance | (16,461,576) | (13,926,257) |
Deferred tax assets - net |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provisions for Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Current | ||||
Deferred | 1,037,152 | 1,815,795 | ||
Change in valuation allowance | (1,037,152) | (1,815,795) | ||
Total |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Apr. 15, 2019 | Mar. 28, 2019 | Nov. 13, 2017 | Jun. 30, 2020 | Dec. 31, 2019 |
Common stock, shares authorized | 600,000,000 | 600,000,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||
Consideration in cash | $ 1,011,000 | ||||
Alex Brown [Member] | |||||
Stock issued during period | 20,700,000 | ||||
Consideration in cash | $ 2,070 | ||||
30 Individual Investors [Member] | Subscription Agreement [Member] | IPO [Member] | |||||
Stock issued during period | 1,011,000 | ||||
Initial public offering price per shares | $ 1 | ||||
Maximum [Member] | |||||
Common stock, shares authorized | 600,000,000 | ||||
Common stock, par value | $ 0.0001 |
Statutory Reserve (Details Narr
Statutory Reserve (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Statutory reserve, description | The "statutory surplus reserve fund" requires annual appropriations of 10% of after-tax profit until such appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each yearend). | |
DVPD and DVBM [Member] | ||
Statutory reserve, appropriations |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details Narrative) | Jun. 30, 2020 | Dec. 31, 2019 |
Dalian Victory Plaza Development Co, Ltd [Member] | ||
Noncontrolling interest percentage | 20.00% | 20.00% |
Dalian Victory Business Management Co., Ltd. [Member] | ||
Noncontrolling interest percentage | 5.00% | 5.00% |
Noncontrolling Interest - Sched
Noncontrolling Interest - Schedule of Noncontrolling Interest (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Noncontrolling Interest [Abstract] | ||
Noncontrolling interest at beginning of the period | $ (43,300,788) | $ (42,242,097) |
Net loss | (334,132) | (1,495,208) |
Foreign currency translation adjustment | (137,015) | 436,517 |
Noncontrolling interest at end of the period | $ (43,505,078) | $ (43,300,788) |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Dec. 30, 2019 | May 18, 2017USD ($)ft²Integer | May 18, 2017CNY (¥)ft²Integer | May 31, 2020USD ($) | Jun. 30, 2020USD ($)Case | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)LawsuitsCase | Jun. 30, 2020CNY (¥)LawsuitsCase | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Financing agreement payable | $ 72,961,523 | $ 72,961,523 | $ 77,464,781 | |||||||
Lease liabilities payable | 17,768 | 17,768 | ||||||||
Expired lease-back payables | 5,431,553 | 5,431,553 | $ 5,529,680 | |||||||
Guaranteed rent payable | 278,435 | $ 278,435 | ||||||||
Number of lawsuits litigation | Lawsuits | 579 | 579 | ||||||||
Litigants claimed amount | $ 24,580,425 | |||||||||
Accrued extra litigation charges | 4,666,944 | 4,666,944 | ||||||||
Attorney fees with cases | $ 1,157 | $ 0 | $ 8,863 | $ 13,900 | ||||||
SML [Member] | ||||||||||
Total resolved cases | Case | 9 | 565 | 565 | |||||||
Three Separate Compensation Agreements [Member] | ||||||||||
Agreement description | On December 30, 2019, the Company entered into three separate Repayment Agreements with these individuals. The agreements stipulate that these three individuals have to either pay back the loan of RMB 5 million to the bank or provide their own collateral so as to release the Company's property by December 31, 2020. In addition, the agreements require these three individuals pay RMB 50,000 to the Company by May 31, 2020 along with other penalty clauses if these three individuals fail to abide by the agreements. | |||||||||
Unrelated Individual [Member] | ||||||||||
Area of asset in square meters | ft² | 140 | 140 | ||||||||
Area of asset in square feet | ft² | 1,507 | 1,507 | ||||||||
Consideration to acquire | $ 770,000 | |||||||||
Bank loan term and due | 1 year | 1 year | ||||||||
Profit or gain on collateral | ||||||||||
Individual One [Member] | Employee of DVPD [Member] | ||||||||||
Area of asset in square meters | ft² | 138 | 138 | ||||||||
Area of asset in square feet | ft² | 1,485 | 1,485 | ||||||||
Consideration to acquire | $ 770,000 | |||||||||
Bank loan term and due | 1 year | 1 year | ||||||||
Profit or gain on collateral | ||||||||||
Number of rental properties in units | Integer | 7 | 7 | ||||||||
Individual Two [Member] | Employee of DVPD [Member] | ||||||||||
Area of asset in square meters | ft² | 15 | 15 | ||||||||
Area of asset in square feet | ft² | 161 | 161 | ||||||||
Consideration to acquire | $ 770,000 | |||||||||
Bank loan term and due | 1 year | 1 year | ||||||||
Profit or gain on collateral | ||||||||||
Number of rental properties in units | Integer | 2 | 2 | ||||||||
RMB [Member] | ||||||||||
Litigants claimed amount | ¥ | ¥ 173,891,761 | |||||||||
RMB [Member] | Unrelated Individual [Member] | ||||||||||
Consideration to acquire | ¥ | ¥ 5,000,000 | |||||||||
RMB [Member] | Individual One [Member] | Employee of DVPD [Member] | ||||||||||
Consideration to acquire | ¥ | 5,000,000 | |||||||||
RMB [Member] | Individual Two [Member] | Employee of DVPD [Member] | ||||||||||
Consideration to acquire | ¥ | ¥ 5,000,000 | |||||||||
RMB [Member] | Three Individuals [Member] | ||||||||||
Consideration to acquire | $ 50,000 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details Narrative) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020USD ($)Integer | Jun. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2020CNY (¥) | |
Maximum insured bank deposit | $ 72,700 | |||
Uninsured cash balance | $ 26,590 | |||
Number of income receives from tenants | Integer | 700 | |||
Sales Revenue, Net [Member] | ||||
Concentration risk, description | No individual tenant's revenue accounts for more than 10% of the total revenue in the above periods. | |||
Sales Revenue, Net [Member] | Ten Tenants [Member] | ||||
Concentration risk percentage | 15.51% | 19.72% | ||
Accounts Receivable [Member] | Ten Tenants [Member] | ||||
Concentration risk percentage | 12.74% | 12.60% | ||
RMB [Member] | ||||
Maximum insured bank deposit | ¥ | ¥ 500,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Aug. 10, 2020USD ($)LawsuitsCase | Jul. 02, 2020USD ($)Lawsuits | Jun. 05, 2020 | May 31, 2020USD ($) | Jun. 30, 2020Case | Jun. 30, 2020USD ($)Case | Jun. 30, 2020CNY (¥)Case |
Litigants claimed amount | $ 24,580,425 | ||||||
SML [Member] | |||||||
Total resolved cases | Case | 9 | 565 | 565 | ||||
RMB [Member] | |||||||
Litigants claimed amount | ¥ | ¥ 173,891,761 | ||||||
Paycheck Protection Program Loan [Member] | |||||||
Debt instrument, interest rate | 60.00% | ||||||
Debt instrument, description | PPPFA specifies that 60% of the loan needs to be used for employee payroll and the remaining 40% for rent and utilities related expense. PPPFA grants a 24-weeks for the Company to use the funds. | ||||||
Proceeds from loan | $ 114,970 | ||||||
Subsequent Event [Member] | |||||||
Litigants claimed amount | $ 25,099,019 | ||||||
Total resolved cases | Case | 565 | ||||||
Subsequent Event [Member] | SML [Member] | |||||||
Total resolved cases | Case | 565 | ||||||
Subsequent Event [Member] | Dalian City, China [Member] | |||||||
Number of new lawsuits | Lawsuits | 583 | ||||||
Litigants claimed amount | $ 25,099,019 | ||||||
Subsequent Event [Member] | Dalian City, China [Member] | RMB [Member] | |||||||
Litigants claimed amount | $ 174,209,782 | ||||||
Subsequent Event [Member] | New Lawsuits with New Claims [Member] | |||||||
Number of new lawsuits | Lawsuits | 4 | ||||||
Litigants claimed amount | $ 518,594 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Claims of Lawsuits (Details) | Aug. 10, 2020USD ($)ft²Store | Jun. 30, 2020USD ($) |
Total Claimed Amount | $ 24,580,425 | |
Subsequent Event [Member] | ||
Total Store Unit | Store | 583 | |
Total Square Feet | ft² | 104,939 | |
Total Claimed Amount | $ 25,099,019 | |
Property Buy-Back Related Issues [Member] | Subsequent Event [Member] | ||
Total Store Unit | Store | 242 | |
Total Square Feet | ft² | 51,870 | |
Total Claimed Amount | $ 20,052,852 | |
Leases and Lease Back Related Issues [Member] | Subsequent Event [Member] | ||
Total Store Unit | Store | 244 | |
Total Square Feet | ft² | 47,721 | |
Total Claimed Amount | $ 2,910,003 | |
Other Issues [Member] | Subsequent Event [Member] | ||
Total Store Unit | Store | 97 | |
Total Square Feet | ft² | 5,348 | |
Total Claimed Amount | $ 2,136,164 |
Subsequent Events - Schedule _2
Subsequent Events - Schedule of Settlement of Cases (Details) - Subsequent Event [Member] | Aug. 10, 2020Case |
Total resolved cases | 565 |
Property Buy-Back Related Issues [Member] | |
Total resolved cases | 239 |
Leases Payment Related Issues [Member] | |
Total resolved cases | 243 |
Other Issues [Member] | |
Total resolved cases | 83 |