Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | JUFEEL INTERNATIONAL GROUP | |
Entity Central Index Key | 0001725063 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Is Entity Emerging Growth Company? | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Public Float | $ 2,196,067 | |
Entity Common Stock, Shares Outstanding | 28,030,010 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2018 | |
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 4,914,748 | $ 16,391,266 |
Accounts receivable, net | 3,606,660 | 7,613,832 |
Loans to third parties | 823,231 | 306,510 |
Other receivables, net | 166,307 | 514,369 |
Prepayments | 1,048,188 | 2,087,131 |
Inventories | 2,109,088 | 797,889 |
Deferred inventory costs | 1,391,066 | 1,922,486 |
Total current assets | 14,059,288 | 29,633,483 |
Non-current assets | ||
Property, plant and equipment, net | 26,710,049 | 13,158,725 |
Land use right, net | 2,252,211 | 2,416,213 |
Equipment related prepayment | 376,938 | 4,029,015 |
Long term prepayments and other non-current assets | 2,171,508 | 3,140,944 |
Total non-current assets | 31,510,706 | 22,744,897 |
Total assets | 45,569,994 | 52,378,380 |
Current Liabilities | ||
Income tax payable | 2,096,155 | 3,990,404 |
Accounts payable | 1,557,386 | 1,035,006 |
Advanced payments from customers | 2,764,860 | 7,160,513 |
Deferred revenue | 3,546,584 | 7,571,026 |
Amount due to related parties | 1,751,914 | 705,441 |
Liability under credit facility | 874,228 | |
Other taxes payables | 2,231,903 | 4,973,474 |
Accrued expenses and other liabilities | 1,508,819 | 605,974 |
Total current liabilities | 16,331,849 | 26,041,838 |
Non-current liabilities | ||
Farmland lease payable | 801,139 | |
Total non-current liabilities | 801,139 | |
Total liabilities | 16,331,849 | 26,842,977 |
Commitments and contingencies | ||
Shareholders' Equity | ||
Preferred stock (No par value, Unlimited number authorized, Issued and outstanding: none) | ||
Common stock (No par value, Unlimited number authorized, 28,030,010 shares issued and outstanding as of December 31, 2018 and December 31, 2017) | ||
Additional paid in capital | 7,057,676 | 7,057,676 |
Statutory reserve | 1,811,576 | 1,779,412 |
Retained earnings | 20,787,143 | 15,634,756 |
Accumulated other comprehensive (loss) income | (836,958) | 558,264 |
Total Jufeel International Group's shareholders' equity | 28,819,437 | 25,030,108 |
Non-controlling interests | 418,708 | 505,295 |
Total Shareholders' Equity | 29,238,145 | 25,535,403 |
Total liabilities and shareholders' equity | $ 45,569,994 | $ 52,378,380 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Shareholders' Equity | ||
Preferred Stock, par value | $ 0 | $ 0 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par or stated value | $ 0 | $ 0 |
Common Stock, shares issued | 28,030,010 | 28,030,010 |
Common Stock, shares outstanding | 28,030,010 | 28,030,010 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net revenue | ||
Product sales to third parties | $ 17,569,303 | $ 27,578,098 |
Product sales to related parties | 63,985 | 285,874 |
Total net revenue | 17,633,288 | 27,863,972 |
Cost of revenue | ||
Cost of product sales - third parties | 4,553,012 | 4,133,794 |
Cost of product sales - related parties | 16,581 | 58,854 |
Total cost of revenue | 4,569,593 | 4,192,648 |
Gross profit | 13,063,695 | 23,671,324 |
Operating expenses: | ||
Selling and marketing expenses | 918,476 | 2,684,587 |
General and administrative expenses | 4,951,022 | 5,253,734 |
Research and development expenses | 979,944 | 596,297 |
Total operating expenses | 6,849,442 | 8,534,618 |
Income from Operations | 6,214,253 | 15,136,706 |
Other (expenses) income | (13,960) | 68,202 |
Income before income taxes | 6,200,293 | 15,204,908 |
Income tax expense | 1,080,423 | 3,032,253 |
Net income | 5,119,870 | 12,172,655 |
Net loss (income) attributable to non-controlling interests | 64,681 | (291,180) |
Net income attributable to Jufeel International Group. | 5,184,551 | 11,881,475 |
Net income | 5,119,870 | 12,172,655 |
Other comprehensive income | ||
Foreign currency translation (loss) gain, net of nil income taxes | (1,395,222) | 1,074,283 |
Comprehensive income | 3,724,648 | 13,246,938 |
Comprehensive loss (income) attributable to non-controlling interests | 86,587 | (312,747) |
Comprehensive income attributable to Jufeel International Group | $ 3,811,235 | $ 12,934,191 |
Earnings per share-basic and diluted | $ 0.18 | $ 0.42 |
Weighted average number of common stock outstanding-basic and diluted | 28,030,010 | 28,030,010 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Statutory Reserves | Retained Earnings | Accumulated Other Comprehensive Income / Loss | Noncontrolling Interests | Total |
Beginning Balance, Shares at Dec. 31, 2016 | 28,030,010 | ||||||
Beginning Balance, Amount at Dec. 31, 2016 | $ 3,862,062 | $ 598,854 | $ 4,933,839 | $ (516,019) | $ 192,548 | $ 9,071,284 | |
Equity interests contribution by shareholder for employee and non-employee compensation expenses, Amount | 3,195,614 | 3,195,614 | |||||
Foreign currency translation adjustment | 1,074,283 | 21,567 | 1,095,850 | ||||
Statutory reserve | 1,180,558 | (1,180,558) | |||||
Net income (loss) | 11,881,475 | 291,180 | 12,172,655 | ||||
Ending Balance, Shares at Dec. 31, 2017 | 28,030,010 | ||||||
Ending Balance, Amount at Dec. 31, 2017 | 7,057,676 | 1,779,412 | 15,634,756 | 558,264 | 505,295 | 25,535,403 | |
Foreign currency translation adjustment | (1,395,222) | (21,906) | (1,417,128) | ||||
Statutory reserve | 32,164 | (32,164) | |||||
Net income (loss) | 5,184,551 | (64,681) | 5,119,870 | ||||
Ending Balance, Shares at Dec. 31, 2018 | 28,030,010 | ||||||
Ending Balance, Amount at Dec. 31, 2018 | $ 7,057,676 | $ 1,811,576 | $ 20,787,143 | $ (836,958) | $ 418,708 | $ 29,238,145 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows From Operating Activities | ||
Net income | $ 5,119,870 | $ 12,172,655 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 379,372 | 125,519 |
Amortization expense | 179,395 | 175,737 |
Deferred income tax | 3,061 | |
Provision for allowance for doubtful accounts | 3,216 | 72,216 |
Inventory impairment | 18,976 | |
Shareholder contribution for employee and non-employee compensation expenses | 2,320,171 | |
Loss on disposal of property and equipment | 4,299 | 4,132 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,765,978 | (7,370,262) |
Other receivables | 343,684 | 675,216 |
Prepayments | 973,766 | (1,695,142) |
Amounts due from related parties | 3,399,231 | |
Inventories | (1,418,543) | (164,845) |
Deferred inventory costs | 455,576 | (1,860,525) |
Accounts payable | 593,239 | 547,175 |
Income taxes payable | (1,766,211) | 1,711,531 |
Deferred revenue | (3,797,502) | 7,327,014 |
Advanced payments from customers | (4,202,909) | (2,190,045) |
Amount due to related parties | 958,891 | 430,689 |
Other taxes payable | (2,596,128) | 3,236,611 |
Accrued expenses and other current liabilities | 67,848 | 96,839 |
Long term prepayments and other non-current assets | (190,562) | |
Net cash (used) in provided by operating activities | (1,107,745) | 19,016,978 |
Cash Flows From Investing Activities | ||
Purchases of property, plant and equipment | (11,393,885) | (12,627,307) |
Repayment from related parties | 8,704,916 | |
Loans to third parties | (5,417,516) | (296,217) |
Repayment of loan from third parties | 4,866,365 | |
Payment of cooperation deposit | (888,651) | |
Return of cooperation deposit | 906,697 | |
Net cash used in investing activities | (11,038,339) | (5,107,259) |
Cash Flows From Financing Activities | ||
Loan obtained under line of credit | 906,697 | |
Borrowings from a related party | 151,116 | |
Net cash provided by financing activities | 1,057,813 | |
Effect of exchange rate fluctuation on cash and cash equivalents | (388,247) | 579,350 |
Net (decrease) increase in cash and cash equivalents | (11,476,518) | 14,489,069 |
Cash and cash equivalents, beginning of year | 16,391,266 | 1,902,197 |
Cash and cash equivalents, end of year | 4,914,748 | 16,391,266 |
Supplemental disclosure information: | ||
Cash paid for income tax expense | 2,104,562 | 1,320,624 |
Cash paid for interest expense | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchase of property and equipment financed by other payables | $ 340,640 | $ 247,697 |
DESCRIPTION OF BUSINESS AND ORG
DESCRIPTION OF BUSINESS AND ORGANIZATION | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 1. DESCRIPTION OF BUSINESS AND ORGANIZATION | Organization and description of business Jufeel International Group (the “Company” or “Jufeel Wyoming”) was incorporated on July 27, 2017 under the laws of the state of Wyoming, United States of America. Through the reorganization as described below, Jufeel Wyoming ultimately merged with Jufeel International Group Nevada (“Jufeel Nevada”) (formerly Bros Holding Company). The shareholders of Jufeel Nevada became the shareholders of Jufeel Wyoming on a one-for-one basis and Jufeel Wyoming became the ultimate holding company of Jufeel Holdings Co., Ltd. (“Jufeel Holdings”), Ivan International Biology Limited. (“Ivan International”), and Kaifeng Ivan King Biotechnology Co., Ltd. (“Ivan King” or “WFOE”). Jufeel Holdings was established in the British Virgin Islands (“BVI”) on May 10, 2017 by a third party on behalf of Mr. Rongxuan Zhang, the founder, president, chairman and the controlling shareholder of the Company (“Mr. Zhang”). On May 16, 2017, the third party transferred all the shares to Mr. Zhang for no consideration. On August 22, 2017, Mr. Zhang has transferred all the shares to Jufeel Wyoming. Ivan International was established as an investment holding company by a third party in Hong Kong Special Administrative Region of the People’s Republic of China (the “PRC”) on April 23, 2015. On June 7, 2017, the shares of Ivan International were transferred to Mr. Zhang for $1,200. On the same day, Jufeel Holdings signed a shareholding entrustment agreement with Mr. Zhang to state that Mr. Zhang holds the equity interest in Ivan International on behalf of Jufeel Holding. As a result, Jufeel Holdings holds 100% equity interest in Ivan International. On October 27, 2017 the official transfer of shares of Ivan International to Jufeel Holdings was completed. Ivan King was established as a wholly foreign owned enterprise on August 9, 2017 in Kaifeng, the PRC by Ivan International. Ivan King is principally engaged in providing related technical supports and business consulting services to Kaifeng Jufeel Biotech Co, Ltd. (“Kaifeng Jufeel”). Kaifeng Jufeel was incorporated on August 5, 2011 and registered in Kaifeng, Henan Province, under the laws of the PRC with a principal office in Zhengzhou, Henan. Kaifeng Jufeel was 49% owned by Mr. Zhang and 51% owned by Henan Jufeel Technology Group Co., Ltd. (“Henan Jufeel”), an entity owned by Mr. Zhang, before September 23, 2016. From September 23, 2016 to October 24, 2017, Mr. Zhang contributed 32.5% of the equity interests of Kaifeng Jufeel to certain shareholders (see Note 17 for details). After the contribution, Mr. Zhang owns 67.5% of the equity interests of Kaifeng Jufeel. Hainan Zhongchen Biological Engineering Co, Ltd. (“Hainan Zhongchen”), was incorporated on July 3, 2001 in Haikou, Hainan Province, under the laws of the PRC by former independent third parties. In 2012, the 70% ownership interest of Hainan Zhongchen was sold to Jufeel Technology and Trading Co., Ltd., a company which was controlled by Mr. Zhang, for $3,103,133 and Mr. Zhang became the ultimate controlling shareholder of Hainan Zhongchen. In October 2016, the 70% ownership interest of Hainan Zhongchen owned by Jufeel Technology and Trading Co., Ltd. was transferred to Kaifeng Jufeel. As a result, the transfer of the 70% ownership interest was accounted as business combination under common control. Suzhou Yihuotong E-business Co, Ltd (“Suzhou Yihuotong”) was incorporated on August 10, 2016 registered in Suzhou, Jiangsu Province, under the laws of the PRC, a wholly owned subsidiary of Kaifeng Jufeel. Wuxi Jufeel PMAS Life Technology Co, Ltd (“Wuxi Jufeel”) was incorporated on October 11, 2016 registered in Suzhou, Jiangsu Province, under the laws of the PRC. The shareholders Mrs. Zhang Yi, Henan Jufeel and Mr. Lu Dajie hold 70%, 10% and 20% of Wuxi Jufeel’s ownership interest, respectively. On the same day, Mrs. Zhang Yi and Henan Jufeel signed a share entrustment agreement with Kaifeng Jufeel to state that they hold the equity interest in Wuxi Jufeel on behalf of Kaifeng Jufeel. In this regard, Kaifeng Jufeel owns 80% equity interest in Wuxi Jufeel. As a result, Kaifeng Jufeel consolidates Wuxi Jufeel and there is a 20% non-controlling interests in Wuxi Jufeel. Changzhou Jufeel PMAS Aloe Biotechnology Co, Ltd. (“Changzhou Jufeel”) was incorporated on May 23, 2017 registered in Changzhou, Jiangsu Province, under the laws of the PRC, Kaifeng Jufeel owns 70%, and Wuxi Jufeel owns 30% of its equity interests. Reorganization On January 14, 2017, Jufeel Nevada was purchased by a third party on behalf of Mr. Zhang for $120,000 and then transferred to Mr. Zhang on February 27, 2017 for no consideration. In February 2017, Jufeel Nevada effected a 1-for-500 reverse split of its common stock. As a result of the reverse split, there were 200,010 common shares issued and outstanding, of which 170,000 were beneficially owned by Mr. Zhang and 30,010 shares were owned by the former shareholders. The 30,010 shares owned by the former shareholders have been presented as outstanding as of the beginning of the earliest period presented. In July 2017, Jufeel Nevada reorganized as a holding company, incorporating three tiers of Oklahoma subsidiaries (Jufeel Interim Corporation (“Jufeel Interim”), Jufeel International Group, Inc. (“Jufeel Oklahoma”), Bros Holding Company and Jufeel Wyoming). In August 2017, Jufeel Nevada merged into Jufeel Interim, and then merged into Bros Holding Company, with Bros Holding Company as the surviving entity. Bros Holding Company was sold to a non-affiliated third party, and later dissolved on November 3, 2017. On August 22, 2017, Jufeel Oklahoma merged into Jufeel Wyoming in order to change its domicile to Wyoming, with Jufeel Wyoming as the surviving entity. Effective on August 22, 2017, shareholders of Kaifeng Jufeel and Ivan King or WOFE entered into a series of contractual agreements (“VIE Agreements” which are described below). As a result, the Company, through its wholly owned subsidiaries Ivan King, identify Kaifeng Jufeel as a variable interest entity (or “VIE”) and has been determined to be the primary beneficiary of Kaifeng Jufeel. Accordingly, the Company consolidates Kaifeng Jufeel’s operations, assets and liabilities. As a part of the holding company reorganization, on September 15, 2017 and October 24, 2017, Jufeel Wyoming issued 27,830,000 additional shares to Mr. Zhang and employees, service providers and cooperation partners of the Company. The issuance of these shares represented interests for each holders in Kaifeng Jufeel prior to the reorganization. Following the issuances, Mr. Zhang owns, either directly or through entities controlled by him, approximately 18,892,943 shares, or 67.4% of the Company’s common stock. On October 25, 2017, the reorganization was completed. Immediately before and after the Reorganization, the ultimate owners’ equity interests of Kaifeng Jufeel were almost identical of those of the Company. Accordingly, the Reorganization is accounted for as a legal reorganization of the entities under common control in a manner akin to a pooling of interest as if the Company, through its wholly owned subsidiaries, had been in existence and been the primary beneficiary of the VIE throughout the periods presented in the consolidated financial statements. The VIE arrangements: On August 22, 2017, Ivan King, Kaifeng Jufeel, and the shareholders of Kaifeng Jufeel have entered into a series of contractual agreements in order to enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of Kaifeng Jufeel, and (2) receive the economic benefits of Kaifeng Jufeel that could be significant to Kaifeng Jufeel. The Company is fully and exclusively responsible for the management of Kaifeng Jufeel, assumes all of risk of losses of Kaifeng Jufeel and has the exclusive right to exercise all voting rights of Kaifeng Jufeel’s shareholder. Therefore, the Company is considered the primary beneficiary of Kaifeng Jufeel and has consolidated Kaifeng Jufeel’s assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial statements. · Agreements that transfer economic benefits to Ivan King Business Operations Agreement Exclusive Consulting and Service Agreement. · Agreements that provide Ivan King effective control over Kaifeng Jufeel Shareholder’s Voting Proxy Agreement. Exclusive Equity Option Agreement. Equity Interest Pledge Agreement. Risks in relation to the VIE structure The Company believes that the contractual arrangements with its VIE and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: · revoke the business and operating licenses of the Company’s PRC subsidiary and VIE; · discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIE; · limit the Group’s business expansion in China by way of entering into contractual arrangements; · impose fines or other requirements with which the Company’s PRC subsidiary and VIE may not be able to comply; · require the Company or the Company’s PRC subsidiary and VIE to restructure the relevant ownership structure or operations; or · restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Group’s business and operations in China. The Company’s ability to conduct its business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIE in its consolidated financial statements as it may lose the ability to exert effective control over the VIE and their respective shareholders and it may lose the ability to receive economic benefits from the VIE. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary or its VIE. The interests of the shareholders of the VIE may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing the VIE not to pay the service fees when required to do so. The Company cannot assure that when conflicts of interest arise, shareholders of the VIE will act in the best interests of the Company or that conflicts of interests will be resolved in the Company’s favor. Currently, the Company does not have existing arrangements to address potential conflicts of interest the shareholders of the VIE may encounter in its capacity as beneficial owners and directors of the VIE, on the one hand, and as beneficial owners and directors of the Company, on the other hand. The Company believes the shareholders of the VIE will not act contrary to any of the contractual arrangements and the exclusive option agreements provide the Company with a mechanism to remove the current shareholders of the VIE should they act to the detriment of the Company. The Company relies on certain current shareholders of the VIE to fulfill their fiduciary duties and abide by laws of the PRC and act in the best interest of the Company. If the Company cannot resolve any conflicts of interest or disputes between the Company and the shareholders of the VIE, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings. Total assets and liabilities presented on the Company’s consolidated balance sheets and revenue, expense and net income presented on consolidated statements of income and comprehensive income as well as the cash flow from operating, investing and financing activities presented on the consolidated statements of cash flows are substantially the financial position, operation and cash flow of the Company’s VIE and its subsidiaries. The Company has not provided any financial support to Kaifeng Jufeel for the years ended December 31, 2018 and 2017. The assets and liabilities of the consolidated VIE as of December 31, 2018 and 2017 are listed below: December 31, December 31, 2018 2017 Current assets $ 13,250,570 $ 29,598,898 Non-current assets 31,510,706 22,744,897 Total assets $ 44,761,276 $ 52,343,795 Current liabilities $ 16,061,399 $ 26,006,390 Non-current liabilities - 801,139 Total liabilities $ 16,061,399 $ 26,807,529 Details of the subsidiaries and VIE of the Company are set out below: Date of incorporation Place of incorporation Percentage of ownership Principal activities Wholly owned subsidiaries Jufeel Holdings May 10, 2017 British Virgin Islands 100% Investment holding Ivan International April 23, 2015 Hong Kong 100% Investment holding Ivan King August 09, 2017 PRC 100% Consultancy service Variable Interest Entity (“VIE”) Kaifeng Jufeel August 05, 2011 PRC VIE Aloe product and distributorship sales VIE’s subsidiaries Hainan Zhongchen July 03, 2001 PRC 70% owned by Kaifeng Jufeel Aloe material production and sales Suzhou Yihuotong August 10, 2016 PRC 100% owned by Kaifeng Jufeel Aloe product sales Wuxi Jufeel October 11, 2016 PRC 80% owned by Kaifeng Jufeel Aloe product production and sales Changzhou Jufeel May 23, 2017 PRC 70% owned by Kaifeng Jufeel and 30% owned by Wuxi Jufeel Aloe product production and sales |
SUMMARIES OF SIGNIFICANT ACCOUN
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES | a. Basis of preparation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. b. Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries and its VIE. All inter-company transactions and balances have been eliminated upon consolidation. Non-controlling interests represent the equity interests in the subsidiaries of the VIE that are not attributable, either directly or indirectly, to the Company. c. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions include allowance for doubtful accounts, valuation of inventory and fair value of equity interests contribution from shareholders, valuation allowance for deferred tax assets and recoverability of carrying amount and the estimated useful lives of long-lived assets. d. Cash and cash equivalents Cash and cash equivalents consist of cash on hand, cash in bank with no restrictions, as well as highly liquid investments which are unrestricted as to withdrawal or use, and which have remaining maturities of three months or less when initially purchased. e. Allowance for doubtful accounts The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing receivables. The Company determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company usually receives customer payments in advance for its distributors/agents sales, and gives one month credit terms to some of the enterprise customers and retail customers. The allowance for doubtful accounts as of December 31, 2018 and 2017 was $74,145 and $74,621, respectively. f. Inventory The Company values its inventories at the lower of cost or net realizable value. Where there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down to net realizable value. Any idle facility costs or excessive spoilage are recorded as current period charges. Hainan Zhongchen used weighted average method for its finished goods and first in first out method for other inventories. Wuxi Jufeel and Changzhou Jufeel used weighted average for inventories. Kaifeng Jufeel used first in first out method for inventories. The impairment charged for the years ended December 31, 2018 and 2017 was $18,976 and nil, respectively. g. Deferred inventory costs The Company has not recognized revenue for the part of the inventory delivered where the collectability was not reasonably assured for the years ended December 31, 2018 and 2017 and recognized deferred inventory costs for the delivered inventories as the costs related directly to contracts. The costs are expected to be recovered when the Company collects from its customers. The deferred inventory costs will be charged to the cost of revenue when collections are made from its customers and revenue is recognized. h. Research and development expenditures Research and development expenditures include salaries, wages and other costs of personnel engaged in research and development, costs of services performed by others for research and development on our behalf are expensed when incurred. i. Property, plant and equipment, net Property and equipment are recorded at cost less accumulated depreciation with no residual value. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: Buildings 20 years Machinery and equipment 3-11 years Furniture and office equipment 3-10 years Motor vehicles 4-8 years Leasehold improvements Shorter of estimated useful life (10 to 20 years) or remaining lease terms When office equipment and electronic devices are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not improve or extend the expected useful lives of the assets are charged to expenses as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the remaining lease term. Construction in progress is related to the construction or development of property (including land) and equipment that have not yet been placed in service for our intended use. Depreciation for equipment commences once it is placed in service and depreciation for buildings and amortization of leasehold improvements commences once they are ready for our intended use. Construction in progress represents capital expenditures for direct costs of construction or acquisition and design fees incurred, and the interest expenses directly related to the construction. Capitalization of these costs ceases and the construction in progress is transferred to the appropriate category of property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. Construction in progress is not depreciated. j. Land use right Land use rights are stated at cost less accumulated amortization. Amortization is recorded using the straight-line method over their 50 year useful lives. All land in China is owned by the Chinese government. The government in China, according to law, may sell the right to use the land for a specified period of time. Thus, all of the Company’s land purchases in China are considered to be leasehold land under lease and are stated at cost less accumulated amortization. k. Long-Lived Assets Certain assets such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets that are held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset. No impairment was recognized for the years ended December 31, 2018 and 2017. l. Revenue recognition The Company recognizes revenue in accordance with Accounting Standard Codification (“ASC”) 605, Revenue Recognition. Revenues are recognized when the four of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the title and risk of loss have passed, (iii) the fees are fixed or determinable, and (iv) collectability is reasonably assured. Amounts received for undelivered merchandise are recorded as advanced payments from customers. The sales of aloe products are derived principally from providing aloe products to customers, including both distributors/agents and enterprise customers. (a) Distributors/Agents: The Company recognizes revenue upon the delivery of products to distributors/agents, which is when title and risk and rewards of ownership have passed to distributors/agents and when collectability is reasonably assured. When the collectability is not reasonably assured, the revenue will not be recognized until payments are collected. Discounts provided were recorded as deduction of net sales. (b) Enterprise customers: For enterprise customers, the Company recognized revenue when the title and risk of loss have passed to enterprise customers and collectability is reasonably assured. When the collectability is not reasonably assured, the Company recognize revenue according to cost recovery method where no profit is recognized until the proceeds received exceed the related cost of the goods delivered. All collections received after the costs are fully recovered are reflected as income. The Company deferred the recognition of revenue with deferred inventory cost of $1,391,066 and $1,922,486 as of December 31, 2018 and 2017, respectively, for the related cost of inventory already delivered where the collections of payment from the enterprise customers are not reasonably assured. The Company recorded accounts receivable of $3,546,584 and $7,571,026 as the Company had the legal right to claim on the proceeds from the enterprise customers and with credit to deferred revenue in the same amount as of December 31, 2018 and 2017, respectively. For the accounts receivable as of December 31, 2017, $7,466,669 has been collected and recognized in 2018. Subsequently, $3,087,124 of the accounts receivable as of December 31, 2018 were collected and same amount of deferred revenue recognized as revenue. $1,220,432 of the deferred inventory costs as of December 31, 2018 were released to the cost of revenue. Taxes that have been assessed by governmental authorities and that are directly imposed on revenue-producing transactions between the Company and its customers, including value-added, and tax surcharge, are presented on a net basis (excluded from net sales). m. Advertising, Sales and Marketing Costs Advertising, sales and marketing costs consist primarily of costs for the promotion of corporate image and product marketing. The Company expensed all marketing and advertising costs as incurred. n. Shipping and handling costs The Company expenses shipping and handling costs in conjunction with sale of its products as incurred and the shipping and handling costs is included as part of selling and marketing expenses. Total shipping and handling costs were $223,121 and $286,431 for the years ended December 31, 2018 and 2017, respectively. o. Share-based compensation Employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses over the requisite service period, which is the vesting period. All transactions in which goods or services from non-employees are received in exchange for equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Non-employees’ share-based awards are measured at fair value at the earlier of the commitment date or the date the services are completed. The fair value of the equity award granted was assessed using discounted cash flow method under income approach, with a discount for lack of marketability given that the equity interests underlying the awards were not publicly traded. This assessment required complex and subjective judgments regarding the Company’s projected financial and operating results, its unique business risks, the liquidity of its ordinary shares and its operating history and prospects at the time the promise to give the equity interests were made. The fair value of these awards was determined using management’s estimates and assumptions. Significant estimates and assumptions used were including revenue growth rate, terminal growth rate, and discount rate. The assumptions used in share-based compensation expense recognition represent management’s best estimates, but these estimates involve inherent uncertainties and application of management judgment. If factors change or different assumptions are used, the share-based compensation expenses could be materially different for any period. Moreover, the estimates of fair value of the awards are not intended to predict actual future events or the value that ultimately will be realized by grantees who receive share-based awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company for accounting purposes. p. Shareholder contribution The value of the shares transferred should be reflected as an expense in the Company’s financial statements with a corresponding credit to contributed (paid-in) capital. Share-based payments awarded to an employee of the reporting entity by a related party or other holder of an economic interest in the entity as compensation for services provided to the entity are share-based payment transactions to be accounted as above unless the transfer is clearly for a purpose other than compensation for services to the reporting entity. The substance of such a transaction is that the economic interest holder makes a capital contribution to the employees of the Company in exchange for services rendered. q. Income taxes The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance. Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized. r. Value added taxes (“VAT”) The Company was subject to VAT at the rate of 17% on sales of its products (before May 1, 2018), and 11% on sales of the agricultural products (before May 1, 2018) and at the rate of 6% of its membership revenue. The PRC government has announced VAT reduction, which was effected in May 2018. Therefore, on and after May 1, 2018, the Company is subject to VAT at the rate of 16% on sales of its products, and 10% on sales of the agricultural products and at the rate of 6% of its membership revenue, which the Company issued membership fee VAT invoices though membership fees are recognized with the sales of aloe products as a single unit of accounting under US GAAP. The Company is also subject to surcharges, which includes urban maintenance and construction taxes and additional education fees on VAT payable in accordance with PRC law. The surcharges are at the rate of 12% of the VAT payable, depending on which tax jurisdiction the Company’s PRC operating subsidiaries and the VIE operate in. s. Related parties A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is 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 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 own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. t. Foreign currency transactions and translations An entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the Renminbi (“RMB’), and PRC is the primary economic environment in which the Company operates. The reporting currency of these combined financial statements is the United States dollar (“US Dollars” or “$”). For financial reporting purposes, the financial statements of the Company, which are prepared using the RMB, are translated into the Company’s reporting currency, the United States Dollar. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net loss of the combined financial statements for the respective periods. The exchange rates used for foreign currency translation were as follows (US Dollars $1 = RMB): Year End Average 12/31/2018 6.8632 6.6174 12/31/2017 6.5342 6.7518 12/31/2016 6.9370 6.6423 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. u. Statutory Reserve The Company’s PRC subsidiaries, VIE and VIE’s subsidiaries in China are required to make appropriations to certain non-distributable reserve funds. In accordance with the laws applicable to China’s Foreign Investment Enterprises, the Company’s subsidiaries that are foreign investment enterprises in China have to make appropriations from their after-tax profit (determined under the Accounting Standards for Business Enterprises promulgated by the Ministry of Finance of the People’s Republic of China (“PRC GAAP”) to reserve funds including (i) general reserve fund; (ii) enterprise expansion fund; and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the respective companies. Appropriations to the other two reserve funds are subject to discretion of respective companies. v. Earnings per share Companies are required to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common stock outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common stock (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2018 and 2017: Year ended December 31, 2018 2017 Numerator: Net income attributable to Jufeel International Group $ 5,184,551 $ 11,881,475 Denominator: Weighted-average shares outstanding basic and diluted: -Common stock issued and outstanding 28,030,010 28,030,010 Basic and diluted earnings per share $ 0.18 $ 0.42 w. Comprehensive Income Comprehensive income is defined as the change in equity of the Company during a period from transactions and other events and circumstances excluding those resulting from investments by and distributions to shareholders. Accumulated other comprehensive income (loss), as presented on the accompanying consolidated balance sheets, only consists of cumulative foreign currency translation adjustment. x. Segment Reporting The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s reportable segments are based on products, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company has two reportable segments (aloe product sales and aloe material sales) for the years ended December 31, 2018 and 2017. y. Fair Value Measurements The Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are described below: · Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. · Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. There were no transfers between level 1, level 2 or level 3 measurements for the years ended December 31, 2018 and 2017. As of December 31, 2018 and 2017, none of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis. The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivables, short-term bank loan and accounts payable, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. z. JOBS Act Accounting Election The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows the Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, the financial statements may not be comparable to companies that comply with public company effective dates. aa. Recently issued accounting standards In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. This new standard (Topic 606) will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to correlate with the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year, while allowing a company to adopt the new revenue standard early but not before the original effective date. In March 2016, the FASB issued ASU 2016-08, which amends the principal-versus-agent implementation guidance and illustrations in the new revenue standard. ASU No. 2016-08 specifically provides clarification around performance obligations for goods or services provided by another entity, assisting in determining whether the entity is the provider of the goods or services, the principal, or whether the entity is providing for the arrangement of the goods or services, the agent. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU No. 2016-10 provides guidance around identifying whether promised goods or services are distinct and separately identifiable, whether promised goods or services are material or immaterial to the contract, and whether shipping and handling is considered an activity to fulfill a promise or an additional promised service. ASU No. 2016-10 also provides guidance around an entity’s promise to grant a license providing a customer with either a right to use or a right to access the license, which then determines whether the obligation is satisfied at a point in time or over time, respectively. In May 2016, the FASB issued ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, which rescinds various standards codified as part of Topic 605, Revenue Recognition in relation to the future adoption of Topic 606. These rescissions include changes to topics pertaining to revenue and expense recognition including accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”). ASU 2016-12 and ASU 2016-20 do not change the core principle of the guidance in Topic 606. Rather, ASU 2016-12 and ASU 2016-20 affects only certain narrow aspects of Topic 606. The Company adopted the new revenue standard beginning January 1, 2019 and decided to use the modified retrospective method. Based on the Company’s preliminary evaluation, the Company identified similar amount and timing of revenue recognized compared with the legacy U.S. GAAP, i.e. the adoption of the new revenue recognition standard will have no material impact on the Company’s financial condition and results of operations. However, adopting the new revenue standard will significantly increase the disclosure requirements of the sufficient information (qualitatively and quantitatively) to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company plans to continue the evaluation and analysis of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify or amend ASU 2014-09’s provisions) as the Company works towards the implementation and finalizes its determination of the impact that the adoption will have on its consolidated financial statements. In February 2018, the FASB issued guidance to address the income tax accounting treatment of the tax effects within other comprehensive income due to the enactment of the Tax Cuts and Jobs Act (the “Act”). This guidance allows entities to elect to reclassify the tax effects of the change in the income tax rates from other comprehensive income to retained earnings. The guidance is effective for periods beginning after December 15, 2018 although early adoption is permitted. The Company has evaluated and concluded that there was no impact on its consolidated financial position and results of operations. In March 2018, the FASB issued ASU 2018-05: “Income Taxes (Topic 740)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”. The amendments in this ASU add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 – the date on which the Tax Cuts and Jobs Act was signed into law. The Company has evaluated and concluded that there was no impact on its consolidated financial position and results of operations. In June 2018, the FASB issued ASU 2018-07: “Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting”. This ASU expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other companies, the amendments 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, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company does not currently expect the adoption of the amendment to have a material impact on its consolidated financial position and results of operations. In July 2018, the FASB issued ASU 2018-09: “Codification improvements”. The amendments represent changes to clarify, correct errors in, or make minor i |
SIGNIFICANT RISKS
SIGNIFICANT RISKS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 3. SIGNIFICANT RISKS | Foreign currency risk The Company’s operations are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment, and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Credit risk Credit risk is one of the most significant risks for the Company’s business. Credit risk exposures arise principally in lending activities which is an off-balance sheet financial instrument. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. The Company places its cash and cash equivalents with financial institutions, which management believes are of high-credit ratings and quality. The Company conducts credit evaluations of customers and generally does not require collateral or other security from its customers. Concentration risk Under PRC regulations, each bank account is insured by People’s bank of China with the maximum amount of RMB 500,000 (approximately US$72,852). The cash and cash equivalents balance held in the PRC bank accounts was $4,907,519 and $16,341,475 as of December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and 2017, most of the Company’s assets were located in the PRC and all of the Company’s revenues were derived from the PRC. Customers’ sales accounted for over 10% of the Company’s total net revenue: Year ended December 31, Year ended December 31, 2018 2017 Customer A 31 % 20 % Customer B 28 % 15 % Customer C 7 % 11 % Customers’ with accounts receivable balances over 10% of the Company’s total net accounts receivable: December 31, December 31, 2018 2017 Customer A 62 % 39 % Customer D 12 % - Customer B - 52 % |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 4. ACCOUNTS RECEIVABLE, NET | December 31, December 31, 2018 2017 Accounts receivable $ 3,677,706 $ 7,676,824 Allowance (71,046 ) (62,992 ) Accounts receivable, net $ 3,606,660 $ 7,613,832 Allowance for doubtful accounts: December 31, December 31, 2018 2017 Balance at beginning of the year $ 62,992 $ - Addition 11,485 60,962 Exchange translation adjustment (3,431 ) 2,030 Balance at end of the year $ 71,046 $ 62,992 All of the accounts receivable are non-interest bearing. Based on the assessment of the collectability of the accounts receivable as of December 31, 2018 and 2017, the Company provided approximately $71,046 and $62,992 allowance, respectively. For the year ended December 31, 2018, $11,485 allowance for doubtful accounts was provided against the Company’s accounts receivables. |
LOANS TO THIRD PARTIES
LOANS TO THIRD PARTIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 5. LOANS TO THIRD PARTIES | December 31, December 31, 2018 2017 Loan to third party A $ 648,386 $ - Loan to third party B 174,845 - Loan to third party C - 306,510 Loans to third parties $ 823,231 $ 306,510 As of December 31, 2018, loan to third parties represented operating loans to cooperation partners. Loan to third party A with the principal amount of approximately $5.2 million was from June 2018 to September 2018 without interests. Party A repaid approximately $4.3 million to the Company in August and September 2018 and entered into an extension agreement with the Company in September 2018 and agreed to repay the remaining balance in January 2019 with an annual interest rate of 4.5% for the remaining balance. Party A repaid approximately $0.3 million to the Company in October 2018 and entered into another extension agreement with the Company in January 2019 and agreed to repay the remaining balance in March 2019 with an annual interest rate of 4.5%. The balance had been collected in February 2019 and the Company has waived the interests from Party A. Loan to third party B with the amount of approximately $0.2 million was from September 2018 to January 2019 without interests. Party B entered into an extension agreement with the Company in January 2019 and agreed to repay the remaining balance in March 2019. The balance had been collected in February 2019. As of December 31, 2017, loan to third party C represented operating loan to a cooperation partner. The term of the loan was from December 2017 to February 2018 with the annual interest rate of 3.6%. The balance had been collected in April 2018. |
OTHER RECEIVABLES, NET
OTHER RECEIVABLES, NET | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 6. OTHER RECEIVABLES, NET | December 31, December 31, 2018 2017 Staff advance $ 135,258 $ 84,996 Others 34,148 441,002 Other receivables 169,406 525,998 Allowance (3,099 ) (11,629 ) Other receivables, net $ 166,307 $ 514,369 Allowance for doubtful accounts: December 31, December 31, 2018 2017 Balance at beginning of the year $ 11,629 $ - Addition - 11,254 Reversal (8,269 ) - Exchange translation adjustment (261 ) 375 Balance at end of the year $ 3,099 $ 11,629 Others included a deposit set aside and advanced to an employee for a potential farmland lease with the amount of $306,082 as of December 31, 2017. The contract was not signed since both parties did not reach an agreement at the end and the balance has been subsequently collected at the beginning of January 2018. For the year ended December 31, 2018, $8,269 allowance for doubtful accounts related to other receivables was reversed due to subsequent collection. |
PREPAYMENTS
PREPAYMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 7. PREPAYMENTS | December 31, December 31, 2018 2017 Prepayments for inventory purchase $ 1,027,544 $ 1,345,566 Prepaid service fee and others 20,644 741,565 Prepayment $ 1,048,188 $ 2,087,131 As of December 31, 2017, prepaid service fee mainly included prepayments for consulting service for the Company’s listing with a third party and rental of a lab for research and development. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 8. INVENTORIES | December 31, December 31, 2018 2017 Raw materials $ 119,222 $ 53,129 Packaging materials 297,995 70,187 Finished goods 1,419,121 478,396 Work in progress 272,750 196,177 Inventories $ 2,109,088 $ 797,889 As of December 31, 2018, the balance of finished goods mainly represent two new products launched in 2018 and the balance of work in progress mainly consisted new aloe product in the examination process. |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 9. PROPERTY, PLANT AND EQUIPMENT, NET | Property, plant and equipment consists of the following: December 31, December 31, 2018 2017 Buildings $ 2,733,242 $ - Machinery and equipment 2,458,479 1,483,519 Furniture and office Equipment 538,281 471,197 Motor vehicles 393,254 385,665 Leasehold improvements 711,716 276,569 6,834,972 2,616,950 Less: accumulated depreciation (2,042,794 ) (1,822,942 ) 4,792,178 794,008 Add: construction in process 21,917,871 12,364,717 Property, plant and equipment, net $ 26,710,049 $ 13,158,725 Depreciation expense for the years ended December 31, 2018 and 2017 was $379,372 and $125,519 respectively. Construction in progress represented the Company’s new factory and office building in Kaifeng, Henan Province and building improvement in Changzhou, Jiangsu Province. The main construction work of factory and office building in Kaifeng were completed in the second quarter of 2018 with main construction cost of approximately$17.5 million and it is expected to be placed in service in the second quarter of 2019 when the work on the interior of the building are completed (see Note 22). The Company has not obtained all required construction permits in accordance with Article 64 of the Urban and Rural Planning Law in China, however, the Company has received a waiver letter from local government that the Company would be not subject to any penalty for the construction. As of December 31, 2018, one floor of the office in Changzhou Jufeel, which was recorded in buildings with the carrying value of $1,404,840 was pledged against a credit facility from Jiangnan Rural Commercial Bank (see Note 15). |
LAND USE RIGHT, NET
LAND USE RIGHT, NET | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 10. LAND USE RIGHT, NET | In 2015, the Company received land use rights for a period of 50 years with land sizes of approximately 75,000 square meters, of industrial land in Kaifeng, China from Henan Kaifeng Municipal People’s Government. The Company paid approximately $2.5 million for the land use right. Payment amount included land transfer tax and other fees. This land use right is being used for the Company’s buildings and new manufacturing operations in China. Upon the 50-year expiration of the land use right, the Company will be required to bid again to obtain an extension of these rights. The following summarizes Land Use Right: December 31, December 31, 2018 2017 Land use right, cost $ 2,404,587 $ 2,525,658 Less: Accumulated amortization (152,376 ) (109,445 ) Land use right, net $ 2,252,211 $ 2,416,213 The Land Use Right was recorded at cost and is being amortized on a straight-line basis over its 50-year useful life. Amortization expense for the years ended December 31, 2018 and 2017 was $49,967 and $48,885, respectively. The Company expects to record annual amortization expense of approximately $48,000 for each of the five succeeding years. |
EQUIPMENT RELATED PREPAYMENTS
EQUIPMENT RELATED PREPAYMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 11. EQUIPMENT RELATED PREPAYMENTS | As of December 31, 2018, equipment related prepayment represented prepayments related to the equipment purchase in Changzhou Jufeel and Hainan Zhongchen. As of December 31, 2017, equipment related prepayments consisted of the prepayments made to an agent with the amount of $3,060,818 related to the equipment purchase in July 2017. Since the Company anticipated to change its equipment supplier in 2018 and purchase the equipment after the completion of the factory construction work in 2019, it requested the return of the deposit. As of December 31, 2018, the deposit has been fully collected. |
LONG TERM PREPAYMENTS AND OTHER
LONG TERM PREPAYMENTS AND OTHER NON-CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 12. LONG TERM PREPAYMENTS AND OTHER NON-CURRENT ASSETS | Long term prepayments and other non-current assets mainly consist of prepaid farmland lease of the Company. December 31, 2018 December 31, 2017 Prepaid farmland lease $ 1,962,580 $ 2,192,474 Cooperation deposit - 918,246 Others 208,928 30,224 Long term prepayments and other non-current assets $ 2,171,508 $ 3,140,944 Amortization expense for prepaid farmland lease for the years ended December 31, 2018 and 2017 was $129,428 and $126,852, respectively. Cooperation deposit represented deposit for a healthcare project with a third party in 2017. Due to the local government’s policy changes, the project was suspended in May 2018 and the deposit was returned to the Company in November 2018. As of December 31, 2018, others mainly consisted of long-term deposit for office lease. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 13. OTHER CURRENT LIABILITIES | December 31, December 31, 2018 2017 Employee reimbursement payables $ 95,764 $ 124,630 Rental payables 122,256 21,897 Construction related payables 328,441 236,102 Farmland lease payable (see Note 14) 762,735 - Others 199,623 223,345 Accrued expenses and other liabilities $ 1,508,819 $ 605,974 Other taxes payables $ 2,231,903 $ 4,973,474 Other taxes payables are mainly consisted of VAT payable (see Note 2(r)). |
FARMLAND LEASE PAYABLE
FARMLAND LEASE PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 14. FARMLAND LEASE PAYABLE | The Company entered into a lease agreement with Duncha in June 2013, for a total consideration of $1,101,895 with the term of 30 years from 2013 to 2043. The Company paid $300,756 in 2013 and delayed the payment of the remaining balance because the farmland was affected by typhoon subsequently. The Company has been in negotiation with Duncha concerning the payment term of the remaining balance. It entered into an amendment in November 2018 to postpone the payment of the remaining balance to December 31, 2019. |
LIABILITY UNDER LINE OF CREDIT
LIABILITY UNDER LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 15. LIABILITY UNDER LINE OF CREDIT | In September 2018, the general manager of Changzhou Jufeel, signed a credit facility agreement on behalf of the Company in the amount of RMB12,052,100 (or $1,756,047) with Jiangnan Rural Commercial Bank with a three-year term from September 2018 to September 2021. He entered a written agreement with Changzhou Jufeel that the loan will be used for the Company’s operation needs. The credit facility was guaranteed by Changzhou Jufeel and the general manager’s spouse (sister of the Company’s CEO). In addition, one floor of the office in Changzhou Jufeel with the carrying value of $1,404,840 was pledged against the credit facility (see Note 16). At the end of September 2018, a loan with the principal amount of RMB6,000,000 (or $874,228) with and annual interest rate of 6% was borrowed by the general manager of Changzhou Jufeel from Jiangnan Rural Commercial Bank under this credit facility. The loan period was from September 2018 to September 2019. The proceeds from the loan was used to pay to a vendor of Changzhou Jufeel on its behalf in October 2018. In December 2018, due to the Company not being satisfied with the quality of the aloe powder, the purchase agreement was cancelled, and the vendor returned the RMB6,000,000 (or $874,228) to Changzhou Jufeel. The monthly interest of $4,297 related to the loan has been paid by the general manager from October to December 2018 and accrued by the Company. Changzhou Jufeel will repay him all interest of the loan from the inception of the loan and Changzhou Jufeel shall return RMB 6,000,000 principal to him for payment to the bank at the expiration date of his loan with Jiangnan Rural Commercial Bank. |
RELATED PARTY BALANCE AND TRANS
RELATED PARTY BALANCE AND TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 16. RELATED PARTY BALANCE AND TRANSACTIONS | a. Balances Amount due to related parties: December 31, December 31, 2018 2017 Henan Jufeel Technology Investment Co., Ltd. (i) (a) $ 1,593,931 $ 514,145 Mr. Zhang (b) 157,617 104,337 Sales director of Kaifeng Jufeel (b) - 29,891 General manager of Wuxi Jufeel (holds 20% ownership interest of Wuxi Jufeel (b)) 366 56,242 Director of Hainan Zhongchen (b) - 826 Amount due to related parties $ 1,751,914 $ 705,441 (a) The balance due to Henan Jufeel Technology Investment Co., Ltd. mainly consisted of an advance received by Hainan Zhongchen for aloe products purchase net of its payments made on behalf of Kaifeng Jufeel and Jufeel Wyoming. (b) These balances were mainly advance to the Company for operating capital. (i) This Company is under common control of Mr. Zhang. b. Transactions Years ended December 31, 2018 2017 Related parties paid back the collected sales proceeds (1) $ - $ 3,728,337 Related parties advance to the Company for operation (2) $ 997,536 $ - Payment on behalf of Kaifeng Jufeel for construction vendors (3) $ 151,116 $ - Collection from a related party for the payment on behalf (4) $ 1,080,466 $ - Payment on behalf of a related party in operation (5) $ 1,382,698 $ - Loans repaid from related parties (6) $ - $ 8,704,916 Sales to related parties (7) $ 63,985 $ 285,874 Lease from related parties (8) $ 380,976 $ 349,141 __________ 1. Related parties paid back the collected sales proceeds During years ended December 31, 2018 and 2017, the related parties paid back the collected sales proceeds on behalf of Kaifeng Jufeel in the amount of $nil and $3,728,337, respectively. 2. Related parties advance to the Company for operation During years ended December 31, 2018 and 2017, the related parties advance to the Company for operation in the amount of $997,536 and $nil, respectively. 3. Payment on behalf of Kaifeng Jufeel for construction vendors During years ended December 31, 2018 and 2017, a related party paid on behalf of Kaifeng Jufeel for the construction vendors in the amount of $151,116 and $nil, respectively. 4. Collection from a related party for the payment on behalf During years ended December 31, 2018 and 2017, Ivan King collected from Henan Jufeel Technology Investment Co., Ltd. for the payment on behalf in the amount of $1,080,466 and $nil, respectively 5. Payment on behalf of a related party in operation During years ended December 31, 2018 and 2017, Kaifeng Jufeel and Ivan King paid on behalf of Henan Jufeel Technology Investment Co., Ltd. for operating expenses the amount of $1,382,698 and $nil, respectively. Ivan King has collected from the related party during the year ended December 31, 2018. 6. Loans repaid from related parties During years ended December 31, 2018 and 2017, Jufeel Technology and Trading Co., Ltd. and Mr. Zhang have paid back to the Company amount $nil and $8,704,916, respectively. All the loans were no interest bearing and due on demand. 7. Sales to related parties During years ended December 31, 2018 and 2017, the Company’s product sales to Henan Jufeel Technology Investment Co., Ltd and other related parties totaled $63,985 and $285,874 respectively. 8. Lease from related parties Starting from 2015, the Company leased two floors of an office building from Mr. Zhang and Mrs. Guo Li. The contract periods were from September 2015 with annual rental of approximately $272,189 and renewed in September 2018. The lease agreement is expected to be renewed annually. Starting from the year ended December 31, 2015, the Company leased four vehicles from Mr. Zhang. The contract term was from January 1, 2015 to December 31, 2016 with the annual rental of approximately $108,787 and renewed in January 2018. The lease agreement is expected to be renewed when expire. Expense recorded under these leases during years ended December 31, 2018 and 2017 were $380,976 and $349,141 respectively. 9. Equity interests contributed by shareholder On September 23, 2016, certain employees, service providers and cooperation partners were given equity interests of Kaifeng Jufeel by Mr. Zhang, the controlling shareholder of Kaifeng Jufeel directly (see Note 17) 10. Guarantee provided to a related party As of December 31, 2018, one floor of the office in Changzhou Jufeel with the carrying value of $1,404,840 was pledged against the credit facility borrowed by the general manager of Changzhou Jufeel from Jiangnan Rural Commercial Bank. The credit facility was guaranteed by Changzhou Jufeel (see note 15). |
SHAREHOLDER CONTRIBUTION
SHAREHOLDER CONTRIBUTION | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 17. SHAREHOLDER CONTRIBUTION | Awards to distributors contributed by Mr. Zhang and Henan Jufeel related to sales promotion From September 23, 2016 to December 31, 2016, Kaifeng Jufeel organized sales promotion activities with its customers. As part of these promotional programs, Mr. Zhang and Henan Jufeel gave an aggregate of 5.21% of equity interests of Kaifeng Jufeel to certain customers after these customers paid cash to Kaifeng Jufeel to become exclusive regional distributor and purchase its inventory during that period. The fair value of the equity interests was $758,929 based on the fair value of the Kaifeng Jufeel during the sales promotion period from September 23, 2016 to December 31, 2016. The fair value of the equity interests was assessed using discounted cash flow method under income approach, with a discount for lack of marketability given that the equity interests underlying the awards were not publicly traded at the time given to these customers. This assessment required complex and subjective judgments regarding Kaifeng Jufeel’s projected financial and operating results, its unique business risks, the liquidity of the equity interests and its operating history and prospects at the time the equity interests were given. The fair value of these awards was determined using management’s estimates and assumptions. Significant estimates and assumptions used included revenue growth rate ranging from 9.1% to 12.5%, terminal growth rate of 3%, and discount rate of 15%. The equity interests given are deemed as the consideration to its customers in the form of equity instruments. The fair value of the equity interests was presumed to be a reduction of the selling prices of the Company’s products and, therefore, characterized as a reduction of revenue. Compensation expense paid by Mr. Zhang on behalf of the Company. On September 23, 2016, certain eligible employees were given equity interests of Kaifeng Jufeel by Mr. Zhang, the controlling shareholder of Kaifeng Jufeel. These equity interests given represented 1.32% of Kaifeng Jufeel’s equity interests. The equity interests given had a one year employment requirement from signing the agreements to the issuance of the certificates. All these employees fulfilled the one year employment requirement. As a result, the expense was recognized on a ratable basis over the requisite service period of one year. The corresponding credit side should be recorded as a liability before the employees earned the equity interests and then transferred to APIC when they satisfied the employment requirement. The fair value of the equity interests was $155,166, which was based on the fair value of the Kaifeng Jufeel on September 23, 2016. The fair value was assessed using discounted cash flow method under income approach, with a discount for lack of marketability given that the equity interests underlying the awards were not publicly traded. This assessment required complex and subjective judgments regarding Kaifeng Jufeel’s projected financial and operating results, its unique business risks, the liquidity of the equity interests and its operating history and prospects at the date the equity interests was promised to be given. The fair value of these awards was determined using management’s estimates and assumptions. Significant estimates and assumptions used were including revenue growth rate ranging from 9.1% to 12.5%, terminal growth rate of 3%, and discount rate of 15%. For the years ended December 31, 2018 and 2017, total expenses recorded were $nil and $111,823, respectively. Expense paid by Mr. Zhang to service providers and cooperation partners On September 23, 2016, certain service providers for the US listing services and the local cooperation partners for business channel development were given an aggregate of 25.95% of equity interests of Kaifeng Jufeel by Mr. Zhang, the controlling shareholder of Kaifeng Jufeel for the services. The equity interests is subject claw back before services to be completed. The performance commitment date was determined to be the grant date of the awards because performance by the counterparty to earn the equity instruments is probable at grant date. This is due to the nature of the services needed to be provided by the service providers and cooperation partners to earn the shares of the Company. In addition, it’s provided in the agreement that if the service providers for US listing and cooperation partners for channel development not perform the services to the Company, they are obligated to return the equity interests to Mr. Zhang, and pay the penalty of 15% of the value of equity interests given. It represented a sufficiently large disincentive for nonperformance. As a result, the measurement date is determined to be the commitment date which is the grant date of September 23, 2016 when both parties entered into the agreement and established mutual understanding of the key terms. These service providers and cooperation partners should complete the required services to the Company in a period of time from signing the agreements to the completion of the required services. As a result, the expense was recognized on a ratable basis over the requisite service period. The corresponding credit side should be recorded as a liability before these service providers and local cooperation partners fully earned the equity interests and then transferred to APIC when they completed the service requirements. The fair value of the equity award was $3,040,448 based on the fair value of the Kaifeng Jufeel on September 23, 2016. The fair value was assessed using discounted cash flow method under income approach, with a discount for lack of marketability given that the equity interests underlying the awards were not publicly traded at the time the equity interests were given. This assessment required complex and subjective judgments regarding the Kaifeng Jufeel’s projected financial and operating results, its unique business risks, the liquidity of the equity interests and its operating history and prospects at the time the equity interests were given. The fair value of these awards was determined using management’s estimates and assumptions. Significant estimates and assumptions used were including revenue growth rate ranging from 9.1% to 12.5%, terminal growth rate of 3%, and discount rate of 15%. For the years ended December 31, 2018 and 2017, total expenses recorded were $nil and $2,208,348, respectively. |
BENEFIT PLAN
BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 18. BENEFIT PLAN | Full-time employees of the Company in the People Republic China (“PRC”) participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that PRC operating entities make contributions to the government for these benefits based on certain percentages of the employees’ salaries. Except for required benefits mentioned above, the Company has no legal obligation for the benefits. The total benefits paid were $162,763 and $84,460 for the years ended December 31, 2018 and 2017, respectively. |
TAXATION
TAXATION | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 19. TAXATION | Income Tax The Company was incorporated in Wyoming, United States of America and it is a holding company and does not conduct any substantial operation on its own. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“TCJA” or the “Act”) (which is commonly referred to as “U.S. tax reform”). The Act significantly changes U.S. corporate income tax laws including but not limited to reducing the U.S. corporate income tax rate to 21% beginning in 2018 and imposing a one-time mandatory tax on previously deferred foreign earnings and a new tax on global intangible low-taxed income (“GILTI”) effective for tax years of non-U.S. corporations beginning after December 31, 2017. As a result of tax reform, the Company determined that a portion of its current undistributed foreign earnings is no longer deemed reinvested indefinitely by its non-U.S. subsidiaries. The Company did not recorded provisional tax charge related to the one-time transition tax as there were no cumulative positive earnings and profits from its foreign subsidiaries. Effective January 1, 2018, the Company is subject to the new GILTI tax rules. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of controlled foreign corporations (“CFCs”), subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company has evaluated whether it has additional provision amount resulted by the GILTI inclusion on current earnings and profits of its CFCs. The Company has made an accounting policy choice of treating taxes due on future U.S. inclusions in taxable amount related to GILTI as a current period expense when incurred. As of December 31, 2018, the Company recorded a GILTI inclusion of $1,113, the inclusion was fully offset by current U.S. loss, as such, it does not have additional provision amount recorded for GILTI tax. On December 22, 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income Taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. The Company completed the assessment of the income tax effect of the Tax Act and there were no adjustments recorded to the provisional amounts. The Company has evaluated and concluded that there was no impact on its consolidated financial position and results of operations. The Company’s U.S. deferred tax assets have been remeasured using the new statutory rate of 21%. Jufeel Holdings Co., Ltd. was incorporated in the British Virgin Islands (“BVI”). Under the current law of the BVI, Jufeel Holdings Co., Ltd is not subject to tax on income or capital gains. Additionally, upon payments of dividends by Jufeel Holdings Co., Ltd to its shareholders, no BVI withholding tax will be imposed. Ivan International Biology Limited was incorporated in Hong Kong and does not conduct any substantial operations on its own. No provision for Hong Kong profits tax has been made in the financial statements as Ivan International Biology Limited has no assessable profits. Additionally, upon payments of dividends by Ivan International Biology Limited to its shareholders, no Hong Kong withholding tax will be imposed. The Company’s PRC operating subsidiaries and VIE, being incorporated in the PRC, are governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). The EIT rate of PRC is 25%, which applies to both domestic and foreign invested enterprises. In August 2015, Kaifeng Jufeel was approved by the related PRC governmental authorities as a High and New Technology Enterprise, which enabled the entity, as approved by the local tax authorities of Kaifeng, Henan province, the PRC, to enjoying the favorable statutory tax rate of 15% in years ended December 31, 2015, 2016 and 2017. Kaifeng Jufeel has renewed the High and New Technology Enterprise qualification and has been approved by the local tax authorities in December 2018 and still enjoy the 15% favorable tax rate for the years ending December 31, 2018, 2019 and 2020. Therefore, for the years ended December 31, 2018 and 2017, the applicable income tax rate of Kaifeng Jufeel Biotech Co, Ltd. was 15%. In accordance with PRC Tax Administration Law on the Levying and Collection of Taxes, the PRC tax authorities generally have up to five years to assess underpaid tax plus penalties and interest for PRC entities’ tax filings. In the case of tax evasion, which is not clearly defined in the law, there is no limitation on the tax years open for investigation. Accordingly, the PRC entities remain subject to examination by the tax authorities based on the above. For the years ended December 31, 2018 and 2017, the Company’s income tax expense consisted of: Year ended Year ended December 31 2018 December 31, 2017 Current income tax $ 1,080,423 $ 3,029,192 Deferred income tax - 3,061 $ 1,080,423 $ 3,032,253 A reconciliation of the income tax expenses determined at the PRC statutory corporate income tax rate to the Company’s effective income tax expenses is as follows: Year ended December 31, 2018 Year ended December 31, 2017 Income before income taxes $ 6,200,293 $ 15,204,908 PRC statutory tax rate 25 % 25 % Income tax expense computed at PRC tax rate 1,550,073 3,801,227 Reconciling items: Effect of preferential tax rate (634,943 ) (1,371,239 ) Non-deductible expenses 36,173 606,409 Expired tax attribute carryforwards 90,805 36,499 Others - 6,449 Changes in valuation allowance 38,315 (47,092 ) Effective income tax expense $ 1,080,423 $ 3,032,253 Movement of valuation allowance: December 31, 2018 December 31, 2017 Balance at beginning of the year $ 431,503 $ 429,299 Current year movement 38,315 (47,092 ) Foreign currency translation adjustments (43,260 ) 49,296 Balance at end of the year $ 426,558 $ 431,503 Deferred Tax Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards. The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of December 31, 2018 and 2017, valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized. The Company had deferred tax assets as of December 31, 2018 and 2017, which can be carried forward to offset future taxable income. The management determines it is more likely than not that these deferred tax assets could not be recognized, so full allowances were provided as of December 31, 2018. The operating loss carry forward incurred by the Company’s PRC subsidiaries and VIE that will expire in year 2023. The operating loss carry forward incurred by Jufeel Wyoming after December 31, 2017 will no longer be available to carry back, but will carry forward indefinitely. Furthermore, the Act imposes an annual limit of 80% on the amount of taxable income that can be offset by net operating loss arising in tax years ending after December 31, 2017. The Company maintains a full valuation allowance against its net U.S. deferred tax assets, since due to uncertainties surrounding future utilization, the Company estimates there will not be sufficient future earnings to utilize its U.S. deferred tax assets. The Company’s deferred tax assets were as follows: December 31, 2018 December 31, 2017 Tax effect of net operating losses carried forward $ 410,004 $ 418,572 Allowance for doubtful accounts and inventory impairment 16,554 12,931 Valuation allowance (426,558 ) (431,503 ) Deferred tax assets, net $ - $ - The following represents the amounts and expiration dates of operating loss carry forwards incurred by the Company’s PRC subsidiaries and VIE for tax purpose: Amount 2019 $ 363,221 2020 176,016 2021 627,764 2022 362,385 2023 299,901 Total $ 1,829,287 There were no uncertain tax positions as of December 31, 2018 and 2017 and the Company does not believe that this will change over the next twelve months. |
SECURITIES
SECURITIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 20. SECURITIES | Jufeel International Group was incorporated in the State of Wyoming on July 27, 2017. As of the incorporation date, the authorized number of shares of common stock is unlimited with no par value. On October 24, 2017, 28,030,010 shares of common stock were outstanding, of which 18,892,943 shares were held by Mr. Zhang. The share structure before and after the reorganization was almost the same. As a result, the total number of 28,030,010 shares should be applied retrospectively as shares outstanding as of January 1, 2017. As of the incorporation date, the authorized number of preferred shares is unlimited with no par value and no preferred shares are outstanding. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 21. SEGMENT REPORTING | The Company follows ASC Topic 280 “Segment Reporting”, which requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and evaluating their performance. Reportable operating segments include components of an entity about which separate financial information is available and which operating results are regularly reviewed by the chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, to make decisions about resources to be allocated to the segment and assess each operating segment’s performance. Based on management’s assessment, the Company has determined that it has two operating segments which are Aloe product sales and Aloe material sales. These two operating segments are also identified as reportable segments. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. For the year ended December 31, 2018 Aloe product sales Aloe material sales Inter-segment and reconciling item Total Revenues $ 20,562,273 $ 2,034,142 $ (4,963,127 ) $ 17,633,288 Cost of revenue 8,241,218 1,280,284 (4,951,909 ) 4,569,593 Total operating expenses 3,908,759 1,045,715 (12,184 ) 4,942,290 Unallocated corporate expenses - - - 1,907,152 Operating income (loss) 8,412,296 (291,857 ) 966 6,214,253 Net income (loss) 7,309,224 (293,069 ) 966 5,119,870 Segment assets 46,762,137 3,871,395 (5,872,256 ) 44,761,276 Unallocated assets - - - 808,718 Total assets – December 31, 2018 $ 46,762,137 $ 3,871,395 $ (5,872,256 ) $ 45,569,994 For the year ended December 31, 2017 Aloe product sales Aloe material sales Inter- segment and reconciling item Total Revenues $ 34,264,243 $ 2,754,634 $ (9,154,905 ) $ 27,863,972 Cost of revenue 11,290,537 1,848,718 (8,946,607 ) 4,192,648 Total operating expenses 2,863,768 880,463 (182,501 ) 3,561,730 Unallocated corporate expenses - - - 4,972,888 Operating income (loss) 20,109,938 25,453 (25,797 ) 15,136,706 Net income (loss) 17,084,396 88,028 (25,797 ) 12,172,655 Segment assets 52,047,816 4,315,348 (4,019,370 ) 52,343,794 Unallocated corporate assets - - - 34,586 Total assets – December 31, 2017 $ 52,047,816 $ 4,315,348 $ (4,019,370 ) $ 52,378,380 |
COMMITMENT
COMMITMENT | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 22. COMMITMENT | A. Operating lease The Company leases vehicle, factory and office premises under various non-cancelable operating lease agreements, with an option to renew the lease. The rental expense for the years ended December 31, 2018 and 2017 was $1,249,332 and $693,645, respectively. All leases are on a fixed repayment basis. None of the leases include contingent rentals. Minimum future commitments under these agreements as of December 31, 2018 are as follows: Lease Commitment Year ending December 31, 2019 $ 890,230 2020 657,083 2021 101,917 2022 37,883 2023 37,883 Thereafter 717,353 Total $ 2,442,349 B. Capital commitments As of December 31, 2018, the Company’s capital commitments contracted but not yet reflected in the consolidated financial statements amounted to $2,104,857, which mainly related to the construction for new factory and office building. It will be financed by the Company’s cash flow generate by operating activities. The Company has no significant pending litigation as of December 31, 2018. |
ADDITIONAL INFORMATION CONDENSE
ADDITIONAL INFORMATION CONDENSED FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 23. ADDITIONAL INFORMATION CONDENSED FINANCIAL STATEMENTS | Relevant PRC statutory laws and regulations permit the payment of dividends by the Company’s PRC subsidiaries and VIE only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, PRC laws and regulations require that annual appropriations of certain percentages of the after-tax income or the increase in net assets for the year (as determined under accounting principles generally accepted in the PRC) should be set aside at each year end as a reserve prior to the payment of dividends. As a result of these PRC laws and regulations, the Company’s PRC subsidiaries and VIE are restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances. The Company’s restricted net assets, comprising of the registered paid in capital and statutory reserve of Company’s PRC subsidiaries and VIE, was approximately $4.9 million and $4.9 million as of December 31, 2018 and 2017, respectively. The condensed financial statements of the Company have been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the Company used the equity method to account for investments in its subsidiaries and VIE. The Company, its subsidiaries and VIE were included in the consolidated financial statements whereby the inter-company balances and transactions were eliminated upon consolidation. For the purpose of the Company’s condensed financial statements, its investments in subsidiaries are reported using the equity method of accounting. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S GAAP have been condensed or omitted. As of December 31, 2018 and 2017, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any. Parent-only financial statements as follows: Balance sheets (Amounts in US$) December 31, December 31, 2018 2017 Assets Current assets Cash and cash equivalents $ - $ 34,686 Total current assets - 34,586 Non-current assets Long term investment 28,819,885 25,000,970 Total non-current assets 28,819,885 25,000,970 Total assets $ 28,819,885 $ 25,035,556 Liabilities and Shareholders’ Equity Current Liabilities Accrued expenses and other liabilities $ 448 $ 5,448 Total current liabilities 448 5,448 Total liabilities 448 5,448 Shareholders’ Equity Preferred stock (No par value, Unlimited number authorized, Issued and outstanding: none) - - Common stock (No par value, Unlimited number authorized, 28,030,010 shares issued and outstanding as of December 31, 2018 and 2017) - - Additional paid in capital 7,057,676 7,057,676 Retained earnings 22,598,718 17,414,167 Accumulated other comprehensive (loss) income (836,957 ) 558,265 Total Shareholders’ Equity 28,819,437 25,030,108 Total liabilities and shareholders’ equity $ 28,819,885 $ 25,035,556 Statement of Operation (Amounts in US$) For the Year Ended For the Year Ended December 31, December 31, 2018 2017 Operating expenses: General and administrative expenses $ 266,288 $ 815 Research and development expenses 3,000 - Total operating expenses 269,288 815 Loss from Operations (269,288 ) (815 ) Other expenses (298 ) (47 ) Share of income from subsidiaries 5,454,137 11,882,337 Income before income taxes 5,184,551 11,881,475 Income tax expense - - Net income $ 5,184,551 $ 11,881,475 Statement of Cash Flows (Amounts in US$) For the Year Ended For the Year Ended December 31, December 31, 2018 2017 Cash flows from operating activities $ (274,586 ) $ 4,586 Cash flows from investing activities - - Cash flows from financing activities 240,000 30,000 Effects of exchange rate changes on cash and cash equivalents - - Net (decrease) increase in cash and cash equivalents (34,586 ) 34,586 Cash and cash equivalents, beginning of year 34,586 - Cash and cash equivalents, end of year $ - $ 34,586 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 24. SUBSEQUENT EVENTS | The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements were issued. Other than as described, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements: - the subsequent collection of loan to a third party in Note 5. |
SUMMARIES OF SIGNIFICANT ACCO_2
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summaries Of Significant Accounting Policies | |
Basis of preparation | The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. |
Principles of consolidation | The consolidated financial statements include the financial statements of the Company, its subsidiaries and its VIE. All inter-company transactions and balances have been eliminated upon consolidation. Non-controlling interests represent the equity interests in the subsidiaries of the VIE that are not attributable, either directly or indirectly, to the Company. |
Use of estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions include allowance for doubtful accounts, valuation of inventory and fair value of equity interests contribution from shareholders, valuation allowance for deferred tax assets and recoverability of carrying amount and the estimated useful lives of long-lived assets. |
Cash and cash equivalents | Cash and cash equivalents consist of cash on hand, cash in bank with no restrictions, as well as highly liquid investments which are unrestricted as to withdrawal or use, and which have remaining maturities of three months or less when initially purchased. |
Allowance for doubtful accounts | The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing receivables. The Company determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company usually receives customer payments in advance for its distributors/agents sales, and gives one month credit terms to some of the enterprise customers and retail customers. The allowance for doubtful accounts as of December 31, 2018 and 2017 was $74,145 and $74,621, respectively. |
Inventory | The Company values its inventories at the lower of cost or net realizable value. Where there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down to net realizable value. Any idle facility costs or excessive spoilage are recorded as current period charges. Hainan Zhongchen used weighted average method for its finished goods and first in first out method for other inventories. Wuxi Jufeel and Changzhou Jufeel used weighted average for inventories. Kaifeng Jufeel used first in first out method for inventories. The impairment charged for the years ended December 31, 2018 and 2017 was $18,976 and nil, respectively. |
Deferred inventory costs | The Company has not recognized revenue for the part of the inventory delivered where the collectability was not reasonably assured for the years ended December 31, 2018 and 2017 and recognized deferred inventory costs for the delivered inventories as the costs related directly to contracts. The costs are expected to be recovered when the Company collects from its customers. The deferred inventory costs will be charged to the cost of revenue when collections are made from its customers and revenue is recognized. |
Research and development expenditures | Research and development expenditures include salaries, wages and other costs of personnel engaged in research and development, costs of services performed by others for research and development on our behalf are expensed when incurred. |
Property, plant and equipment, net | Property and equipment are recorded at cost less accumulated depreciation with no residual value. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: Buildings 20 years Machinery and equipment 3-11 years Furniture and office equipment 3-10 years Motor vehicles 4-8 years Leasehold improvements Shorter of estimated useful life (10 to 20 years) or remaining lease terms When office equipment and electronic devices are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not improve or extend the expected useful lives of the assets are charged to expenses as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the remaining lease term. Construction in progress is related to the construction or development of property (including land) and equipment that have not yet been placed in service for our intended use. Depreciation for equipment commences once it is placed in service and depreciation for buildings and amortization of leasehold improvements commences once they are ready for our intended use. Construction in progress represents capital expenditures for direct costs of construction or acquisition and design fees incurred, and the interest expenses directly related to the construction. Capitalization of these costs ceases and the construction in progress is transferred to the appropriate category of property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. Construction in progress is not depreciated. |
Land use right | Land use rights are stated at cost less accumulated amortization. Amortization is recorded using the straight-line method over their 50 year useful lives. All land in China is owned by the Chinese government. The government in China, according to law, may sell the right to use the land for a specified period of time. Thus, all of the Company’s land purchases in China are considered to be leasehold land under lease and are stated at cost less accumulated amortization. |
Long-Lived Assets | Certain assets such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets that are held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset. No impairment was recognized for the years ended December 31, 2018 and 2017. |
Revenue recognition | The Company recognizes revenue in accordance with Accounting Standard Codification (“ASC”) 605, Revenue Recognition. Revenues are recognized when the four of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the title and risk of loss have passed, (iii) the fees are fixed or determinable, and (iv) collectability is reasonably assured. Amounts received for undelivered merchandise are recorded as advanced payments from customers. The sales of aloe products are derived principally from providing aloe products to customers, including both distributors/agents and enterprise customers. (a) Distributors/Agents: The Company recognizes revenue upon the delivery of products to distributors/agents, which is when title and risk and rewards of ownership have passed to distributors/agents and when collectability is reasonably assured. When the collectability is not reasonably assured, the revenue will not be recognized until payments are collected. Discounts provided were recorded as deduction of net sales. (b) Enterprise customers: For enterprise customers, the Company recognized revenue when the title and risk of loss have passed to enterprise customers and collectability is reasonably assured. When the collectability is not reasonably assured, the Company recognize revenue according to cost recovery method where no profit is recognized until the proceeds received exceed the related cost of the goods delivered. All collections received after the costs are fully recovered are reflected as income. The Company deferred the recognition of revenue with deferred inventory cost of $1,391,066 and $1,922,486 as of December 31, 2018 and 2017, respectively, for the related cost of inventory already delivered where the collections of payment from the enterprise customers are not reasonably assured. The Company recorded accounts receivable of $3,546,584 and $7,571,026 as the Company had the legal right to claim on the proceeds from the enterprise customers and with credit to deferred revenue in the same amount as of December 31, 2018 and 2017, respectively. For the accounts receivable as of December 31, 2017, $7,466,669 has been collected and recognized in 2018. Subsequently, $3,087,124 of the accounts receivable as of December 31, 2018 were collected and same amount of deferred revenue recognized as revenue. $1,220,432 of the deferred inventory costs as of December 31, 2018 were released to the cost of revenue. Taxes that have been assessed by governmental authorities and that are directly imposed on revenue-producing transactions between the Company and its customers, including value-added, and tax surcharge, are presented on a net basis (excluded from net sales). |
Advertising, Sales and Marketing Costs | Advertising, sales and marketing costs consist primarily of costs for the promotion of corporate image and product marketing. The Company expensed all marketing and advertising costs as incurred. |
Shipping and handling costs | The Company expenses shipping and handling costs in conjunction with sale of its products as incurred and the shipping and handling costs is included as part of selling and marketing expenses. Total shipping and handling costs were $223,121 and $286,431 for the years ended December 31, 2018 and 2017, respectively. |
Share-based compensation | Employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses over the requisite service period, which is the vesting period. All transactions in which goods or services from non-employees are received in exchange for equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Non-employees’ share-based awards are measured at fair value at the earlier of the commitment date or the date the services are completed. The fair value of the equity award granted was assessed using discounted cash flow method under income approach, with a discount for lack of marketability given that the equity interests underlying the awards were not publicly traded. This assessment required complex and subjective judgments regarding the Company’s projected financial and operating results, its unique business risks, the liquidity of its ordinary shares and its operating history and prospects at the time the promise to give the equity interests were made. The fair value of these awards was determined using management’s estimates and assumptions. Significant estimates and assumptions used were including revenue growth rate, terminal growth rate, and discount rate. The assumptions used in share-based compensation expense recognition represent management’s best estimates, but these estimates involve inherent uncertainties and application of management judgment. If factors change or different assumptions are used, the share-based compensation expenses could be materially different for any period. Moreover, the estimates of fair value of the awards are not intended to predict actual future events or the value that ultimately will be realized by grantees who receive share-based awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company for accounting purposes. |
Shareholder contribution | The value of the shares transferred should be reflected as an expense in the Company’s financial statements with a corresponding credit to contributed (paid-in) capital. Share-based payments awarded to an employee of the reporting entity by a related party or other holder of an economic interest in the entity as compensation for services provided to the entity are share-based payment transactions to be accounted as above unless the transfer is clearly for a purpose other than compensation for services to the reporting entity. The substance of such a transaction is that the economic interest holder makes a capital contribution to the employees of the Company in exchange for services rendered. |
Income taxes | The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations, projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances, resulting in a future charge to establish a valuation allowance. Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized. |
Value added taxes (“VAT”) | The Company was subject to VAT at the rate of 17% on sales of its products (before May 1, 2018), and 11% on sales of the agricultural products (before May 1, 2018) and at the rate of 6% of its membership revenue. The PRC government has announced VAT reduction, which was effected in May 2018. Therefore, on and after May 1, 2018, the Company is subject to VAT at the rate of 16% on sales of its products, and 10% on sales of the agricultural products and at the rate of 6% of its membership revenue, which the Company issued membership fee VAT invoices though membership fees are recognized with the sales of aloe products as a single unit of accounting under US GAAP. The Company is also subject to surcharges, which includes urban maintenance and construction taxes and additional education fees on VAT payable in accordance with PRC law. The surcharges are at the rate of 12% of the VAT payable, depending on which tax jurisdiction the Company’s PRC operating subsidiaries and the VIE operate in. |
Related parties | A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is 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 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 own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. |
Foreign currency transactions and translations | An entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the Renminbi (“RMB’), and PRC is the primary economic environment in which the Company operates. The reporting currency of these combined financial statements is the United States dollar (“US Dollars” or “$”). For financial reporting purposes, the financial statements of the Company, which are prepared using the RMB, are translated into the Company’s reporting currency, the United States Dollar. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net loss of the combined financial statements for the respective periods. The exchange rates used for foreign currency translation were as follows (US Dollars $1 = RMB): Year End Average 12/31/2018 6.8632 6.6174 12/31/2017 6.5342 6.7518 12/31/2016 6.9370 6.6423 No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. |
Statutory Reserve | The Company’s PRC subsidiaries, VIE and VIE’s subsidiaries in China are required to make appropriations to certain non-distributable reserve funds. In accordance with the laws applicable to China’s Foreign Investment Enterprises, the Company’s subsidiaries that are foreign investment enterprises in China have to make appropriations from their after-tax profit (determined under the Accounting Standards for Business Enterprises promulgated by the Ministry of Finance of the People’s Republic of China (“PRC GAAP”) to reserve funds including (i) general reserve fund; (ii) enterprise expansion fund; and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the respective companies. Appropriations to the other two reserve funds are subject to discretion of respective companies. |
Earnings per share | Companies are required to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common stock outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common stock (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2018 and 2017: Year ended December 31, 2018 2017 Numerator: Net income attributable to Jufeel International Group $ 5,184,551 $ 11,881,475 Denominator: Weighted-average shares outstanding basic and diluted: -Common stock issued and outstanding 28,030,010 28,030,010 Basic and diluted earnings per share $ 0.18 $ 0.42 |
Comprehensive Income | Comprehensive income is defined as the change in equity of the Company during a period from transactions and other events and circumstances excluding those resulting from investments by and distributions to shareholders. Accumulated other comprehensive income (loss), as presented on the accompanying consolidated balance sheets, only consists of cumulative foreign currency translation adjustment. |
Segment Reporting | The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s reportable segments are based on products, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company has two reportable segments (aloe product sales and aloe material sales) for the years ended December 31, 2018 and 2017. |
Fair Value Measurements | The Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are described below: · Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. · Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. There were no transfers between level 1, level 2 or level 3 measurements for the years ended December 31, 2018 and 2017. As of December 31, 2018 and 2017, none of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis. The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivables, short-term bank loan and accounts payable, are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. |
JOBS Act Accounting Election | The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows the Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, the financial statements may not be comparable to companies that comply with public company effective dates. |
Recently issued accounting standards | In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. This new standard (Topic 606) will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to correlate with the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year, while allowing a company to adopt the new revenue standard early but not before the original effective date. In March 2016, the FASB issued ASU 2016-08, which amends the principal-versus-agent implementation guidance and illustrations in the new revenue standard. ASU No. 2016-08 specifically provides clarification around performance obligations for goods or services provided by another entity, assisting in determining whether the entity is the provider of the goods or services, the principal, or whether the entity is providing for the arrangement of the goods or services, the agent. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU No. 2016-10 provides guidance around identifying whether promised goods or services are distinct and separately identifiable, whether promised goods or services are material or immaterial to the contract, and whether shipping and handling is considered an activity to fulfill a promise or an additional promised service. ASU No. 2016-10 also provides guidance around an entity’s promise to grant a license providing a customer with either a right to use or a right to access the license, which then determines whether the obligation is satisfied at a point in time or over time, respectively. In May 2016, the FASB issued ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, which rescinds various standards codified as part of Topic 605, Revenue Recognition in relation to the future adoption of Topic 606. These rescissions include changes to topics pertaining to revenue and expense recognition including accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”). ASU 2016-12 and ASU 2016-20 do not change the core principle of the guidance in Topic 606. Rather, ASU 2016-12 and ASU 2016-20 affects only certain narrow aspects of Topic 606. The Company adopted the new revenue standard beginning January 1, 2019 and decided to use the modified retrospective method. Based on the Company’s preliminary evaluation, the Company identified similar amount and timing of revenue recognized compared with the legacy U.S. GAAP, i.e. the adoption of the new revenue recognition standard will have no material impact on the Company’s financial condition and results of operations. However, adopting the new revenue standard will significantly increase the disclosure requirements of the sufficient information (qualitatively and quantitatively) to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company plans to continue the evaluation and analysis of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify or amend ASU 2014-09’s provisions) as the Company works towards the implementation and finalizes its determination of the impact that the adoption will have on its consolidated financial statements. In February 2018, the FASB issued guidance to address the income tax accounting treatment of the tax effects within other comprehensive income due to the enactment of the Tax Cuts and Jobs Act (the “Act”). This guidance allows entities to elect to reclassify the tax effects of the change in the income tax rates from other comprehensive income to retained earnings. The guidance is effective for periods beginning after December 15, 2018 although early adoption is permitted. The Company has evaluated and concluded that there was no impact on its consolidated financial position and results of operations. In March 2018, the FASB issued ASU 2018-05: “Income Taxes (Topic 740)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”. The amendments in this ASU add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 – the date on which the Tax Cuts and Jobs Act was signed into law. The Company has evaluated and concluded that there was no impact on its consolidated financial position and results of operations. In June 2018, the FASB issued ASU 2018-07: “Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting”. This ASU expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other companies, the amendments 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, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company does not currently expect the adoption of the amendment to have a material impact on its consolidated financial position and results of operations. In July 2018, the FASB issued ASU 2018-09: “Codification improvements”. The amendments represent changes to clarify, correct errors in, or make minor improvements to the Codification, eliminating inconsistencies and providing clarifications in current guidance. The amendments in this ASU include those made to: Income Statement-Reporting Comprehensive Income-Overall; Debt-Modifications and Extinguishments; Distinguishing Liabilities from Equity-Overall; Compensation-Stock Compensation-Income Taxes; Business Combinations-Income Taxes; Derivatives and Hedging-Overall; Fair Value Measurement-Overall; Financial Services-Brokers and Dealers-Liabilities; and Plan Accounting-Defined Contribution Pension Plans-Investments-Other. The amendments are effective for all entities for annual periods beginning after December 15, 2018. The effectiveness of this update is not expected to have a significant effect on the Company’s consolidated financial position or results of operations. In February 25, 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). It requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position 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. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company (as an EGC) that is taking advantage of the extended transition period offered to private entities would apply this for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements. In July 2018, the FSAB issued ASU 2018-10 ASC Topic 842: “Codification Improvements to Leases” The amendments are to address stakeholders’ questions about how to apply certain aspects of the new guidance in Accounting Standards Codification (ASC) 842, Leases. The clarifications address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. The amendments in ASC Topic 842 are effective for EGC for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842). This update provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, the prior comparative period’s financials will remain the same as those previously presented. Entities that elect this optional transition method must provide the disclosures that were previously required. The Company is evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures. In March 2019, the FASB issued ASU 2019-01: “Leases (Topic 842)-Codification Improvements”. The amendments in this ASU (1) reinstate the exception in Topic 842 for lessors that are not manufacturers or dealers, specifically, those lessors will use their cost, reflecting any volume or trade discounts that may apply, as the fair value of the underlying asset. However, if significant time lapses between the acquisition of the underlying asset and lease commencement, those lessors will be required to apply the definition of fair value (exit price) in Topic 820; (2) address the concerns of lessors within the scope of Topic 942 about where “principal payments received under leases” should be presented, specifically, lessors that are depository and lending institutions within the scope of Topic 942 will present all “principal payments received under leases” within investing activities; and (3) clarify the Board’s original intent by explicitly providing an exception to the paragraph 250-10-50-3 interim disclosure requirements in the Topic 842 transition disclosure requirements. The effective date of the amendments in this ASU is for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years for any of the following: 1. A public business entity; 2. A not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market; and 3. An employee benefit plan that files financial statements with the U.S. Securities and Exchange Commission (SEC). For all other entities, the effective date is for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted. An entity should early apply the amendments as of the date that it first applied Topic 842, using the same transition methodology in accordance with paragraph 842-10-65-1(c). The Company is evaluating the effect this new guidance will have on its consolidated financial statements and related disclosures. No other recently issued accounting standards are expected to have a material effect on the financial position, results of operations or cash flows of the Company. |
DESCRIPTION OF BUSINESS AND O_2
DESCRIPTION OF BUSINESS AND ORGANIZATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Description Of Business And Organization | |
Schedule of assets and liabilities of consolidated variable interest entities | December 31, December 31, 2018 2017 Current assets $ 13,250,570 $ 29,598,898 Non-current assets 31,510,706 22,744,897 Total assets $ 44,761,276 $ 52,343,795 Current liabilities $ 16,061,399 $ 26,006,390 Non-current liabilities - 801,139 Total liabilities $ 16,061,399 $ 26,807,529 |
Schedule of subsidiaries and variable interest entities | Date of incorporation Place of incorporation Percentage of ownership Principal activities Wholly owned subsidiaries Jufeel Holdings May 10, 2017 British Virgin Islands 100% Investment holding Ivan International April 23, 2015 Hong Kong 100% Investment holding Ivan King August 09, 2017 PRC 100% Consultancy service Variable Interest Entity (“VIE”) Kaifeng Jufeel August 05, 2011 PRC VIE Aloe product and distributorship sales VIE’s subsidiaries Hainan Zhongchen July 03, 2001 PRC 70% owned by Kaifeng Jufeel Aloe material production and sales Suzhou Yihuotong August 10, 2016 PRC 100% owned by Kaifeng Jufeel Aloe product sales Wuxi Jufeel October 11, 2016 PRC 80% owned by Kaifeng Jufeel Aloe product production and sales Changzhou Jufeel May 23, 2017 PRC 70% owned by Kaifeng Jufeel and 30% owned by Wuxi Jufeel Aloe product production and sales |
SUMMARIES OF SIGNIFICANT ACCO_3
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summaries Of Significant Accounting Policies Tables Abstract | |
Schedule of estimated useful lives of the assets | Buildings 20 years Machinery and equipment 3-11 years Furniture and office equipment 3-10 years Motor vehicles 4-8 years Leasehold improvements Shorter of estimated useful life (10 to 20 years) or remaining lease terms |
Schedule of exchange rates used for foreign currency translation | Year End Average 12/31/2018 6.8632 6.6174 12/31/2017 6.5342 6.7518 12/31/2016 6.9370 6.6423 |
Schedule of computation of basic and diluted earnings per share | Year ended December 31, 2018 2017 Numerator: Net income attributable to Jufeel International Group $ 5,184,551 $ 11,881,475 Denominator: Weighted-average shares outstanding basic and diluted: -Common stock issued and outstanding 28,030,010 28,030,010 Basic and diluted earnings per share $ 0.18 $ 0.42 |
SIGNIFICANT RISKS (Tables)
SIGNIFICANT RISKS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Risks | |
Schedule of customers, net revenue | Year ended December 31, Year ended December 31, 2018 2017 Customer A 31 % 20 % Customer B 28 % 15 % Customer C 7 % 11 % |
Schedule of customers, net accounts receivable | December 31, December 31, 2018 2017 Customer A 62 % 39 % Customer D 12 % - Customer B - 52 % |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable Net | |
Schedule of accounts receivable net | December 31, December 31, 2018 2017 Accounts receivable $ 3,677,706 $ 7,676,824 Allowance (71,046 ) (62,992 ) Accounts receivable, net $ 3,606,660 $ 7,613,832 |
Schedule of allowance for doubtful accounts | December 31, December 31, 2018 2017 Balance at beginning of the year $ 62,992 $ - Addition 11,485 60,962 Exchange translation adjustment (3,431 ) 2,030 Balance at end of the year $ 71,046 $ 62,992 |
LOANS TO THIRD PARTIES (Tables)
LOANS TO THIRD PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Loans To Third Parties | |
Schedule of loans to third parties | December 31, December 31, 2018 2017 Loan to third party A $ 648,386 $ - Loan to third party B 174,845 - Loan to third party C - 306,510 Loans to third parties $ 823,231 $ 306,510 |
OTHER RECEIVABLES, NET (Tables)
OTHER RECEIVABLES, NET (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Receivables Net | |
Schedule of other receivables, net | December 31, December 31, 2018 2017 Staff advance $ 135,258 $ 84,996 Others 34,148 441,002 Other receivables 169,406 525,998 Allowance (3,099 ) (11,629 ) Other receivables, net $ 166,307 $ 514,369 |
Schedule of allowance for doubtful accounts | December 31, December 31, 2018 2017 Balance at beginning of the year $ 11,629 $ - Addition - 11,254 Reversal (8,269 ) - Exchange translation adjustment (261 ) 375 Balance at end of the year $ 3,099 $ 11,629 |
PREPAYMENTS (Tables)
PREPAYMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Prepayments Tables Abstract | |
Schedule of prepayments | December 31, December 31, 2018 2017 Prepayments for inventory purchase $ 1,027,544 $ 1,345,566 Prepaid service fee and others 20,644 741,565 Prepayment $ 1,048,188 $ 2,087,131 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventories Tables Abstract | |
Schedule of inventories | December 31, December 31, 2018 2017 Raw materials $ 119,222 $ 53,129 Packaging materials 297,995 70,187 Finished goods 1,419,121 478,396 Work in progress 272,750 196,177 Inventories $ 2,109,088 $ 797,889 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property Plant And Equipment Net | |
Schedule of property, plant and equipment, net | December 31, December 31, 2018 2017 Buildings $ 2,733,242 $ - Machinery and equipment 2,458,479 1,483,519 Furniture and office Equipment 538,281 471,197 Motor vehicles 393,254 385,665 Leasehold improvements 711,716 276,569 6,834,972 2,616,950 Less: accumulated depreciation (2,042,794 ) (1,822,942 ) 4,792,178 794,008 Add: construction in process 21,917,871 12,364,717 Property, plant and equipment, net $ 26,710,049 $ 13,158,725 |
LAND USE RIGHT, NET (Tables)
LAND USE RIGHT, NET (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Land Use Right Net | |
Schedule of land use right, net | December 31, December 31, 2018 2017 Land use right, cost $ 2,404,587 $ 2,525,658 Less: Accumulated amortization (152,376 ) (109,445 ) Land use right, net $ 2,252,211 $ 2,416,213 |
LONG TERM PREPAYMENTS AND OTH_2
LONG TERM PREPAYMENTS AND OTHER NON-CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long Term Prepayments And Other Non-current Assets | |
Schedule of long term prepayments and other non-current assets | December 31, 2018 December 31, 2017 Prepaid farmland lease $ 1,962,580 $ 2,192,474 Cooperation deposit - 918,246 Others 208,928 30,224 Long term prepayments and other non-current assets $ 2,171,508 $ 3,140,944 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Current Liabilities | |
Schedule of other current liabilities | December 31, December 31, 2018 2017 Employee reimbursement payables $ 95,764 $ 124,630 Rental payables 122,256 21,897 Construction related payables 328,441 236,102 Farmland lease payable (see Note 14) 762,735 - Others 199,623 223,345 Accrued expenses and other liabilities $ 1,508,819 $ 605,974 Other taxes payables $ 2,231,903 $ 4,973,474 |
RELATED PARTY BALANCE AND TRA_2
RELATED PARTY BALANCE AND TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Balance And Transactions | |
Schedule of related party, due amount | December 31, December 31, 2018 2017 Henan Jufeel Technology Investment Co., Ltd. (i) (a) $ 1,593,931 $ 514,145 Mr. Zhang (b) 157,617 104,337 Sales director of Kaifeng Jufeel (b) - 29,891 General manager of Wuxi Jufeel (holds 20% ownership interest of Wuxi Jufeel (b)) 366 56,242 Director of Hainan Zhongchen (b) - 826 Amount due to related parties $ 1,751,914 $ 705,441 |
Schedule of related party, transactions | Years ended December 31, 2018 2017 Related parties paid back the collected sales proceeds (1) $ - $ 3,728,337 Related parties advance to the Company for operation (2) $ 997,536 $ - Payment on behalf of Kaifeng Jufeel for construction vendors (3) $ 151,116 $ - Collection from a related party for the payment on behalf (4) $ 1,080,466 $ - Payment on behalf of a related party in operation (5) $ 1,382,698 $ - Loans repaid from related parties (6) $ - $ 8,704,916 Sales to related parties (7) $ 63,985 $ 285,874 Lease from related parties (8) $ 380,976 $ 349,141 |
TAXATION (Tables)
TAXATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Taxation | |
Schedule of income tax expense | Year ended Year ended December 31 2018 December 31, 2017 Current income tax $ 1,080,423 $ 3,029,192 Deferred income tax - 3,061 $ 1,080,423 $ 3,032,253 |
Schedule of effective income tax expenses | Year ended December 31, 2018 Year ended December 31, 2017 Income before income taxes $ 6,200,293 $ 15,204,908 PRC statutory tax rate 25 % 25 % Income tax expense computed at PRC tax rate 1,550,073 3,801,227 Reconciling items: Effect of preferential tax rate (634,943 ) (1,371,239 ) Non-deductible expenses 36,173 606,409 Expired tax attribute carryforwards 90,805 36,499 Others - 6,449 Changes in valuation allowance 38,315 (47,092 ) Effective income tax expense $ 1,080,423 $ 3,032,253 |
Schedule of valuation allowance | December 31, 2018 December 31, 2017 Balance at beginning of the year $ 431,503 $ 429,299 Current year movement 38,315 (47,092 ) Foreign currency translation adjustments (43,260 ) 49,296 Balance at end of the year $ 426,558 $ 431,503 |
Schedule of deferred tax assets | December 31, 2018 December 31, 2017 Tax effect of net operating losses carried forward $ 410,004 $ 418,572 Allowance for doubtful accounts and inventory impairment 16,554 12,931 Valuation allowance (426,558 ) (431,503 ) Deferred tax assets, net $ - $ - |
Schedule of operating loss carry forwards | Amount 2019 $ 363,221 2020 176,016 2021 627,764 2022 362,385 2023 299,901 Total $ 1,829,287 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting Tables Abstract | |
Schedule of segment reporting | For the year ended December 31, 2018 Aloe product sales Aloe material sales Inter-segment and reconciling item Total Revenues $ 20,562,273 $ 2,034,142 $ (4,963,127 ) $ 17,633,288 Cost of revenue 8,241,218 1,280,284 (4,951,909 ) 4,569,593 Total operating expenses 3,908,759 1,045,715 (12,184 ) 4,942,290 Unallocated corporate expenses - - - 1,907,152 Operating income (loss) 8,412,296 (291,857 ) 966 6,214,253 Net income (loss) 7,309,224 (293,069 ) 966 5,119,870 Segment assets 46,762,137 3,871,395 (5,872,256 ) 44,761,276 Unallocated assets - - - 808,718 Total assets – December 31, 2018 $ 46,762,137 $ 3,871,395 $ (5,872,256 ) $ 45,569,994 For the year ended December 31, 2017 Aloe product sales Aloe material sales Inter- segment and reconciling item Total Revenues $ 34,264,243 $ 2,754,634 $ (9,154,905 ) $ 27,863,972 Cost of revenue 11,290,537 1,848,718 (8,946,607 ) 4,192,648 Total operating expenses 2,863,768 880,463 (182,501 ) 3,561,730 Unallocated corporate expenses - - - 4,972,888 Operating income (loss) 20,109,938 25,453 (25,797 ) 15,136,706 Net income (loss) 17,084,396 88,028 (25,797 ) 12,172,655 Segment assets 52,047,816 4,315,348 (4,019,370 ) 52,343,794 Unallocated corporate assets - - - 34,586 Total assets – December 31, 2017 $ 52,047,816 $ 4,315,348 $ (4,019,370 ) $ 52,378,380 |
COMMITMENT (Tables)
COMMITMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitment | |
Schedule of future minimum rental payments for operating leases | Lease Commitment Year ending December 31, 2019 $ 890,230 2020 657,083 2021 101,917 2022 37,883 2023 37,883 Thereafter 717,353 Total $ 2,442,349 |
ADDITIONAL INFORMATION CONDEN_2
ADDITIONAL INFORMATION CONDENSED FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Additional Information Condensed Financial Statements | |
Schedule of condensed balance sheet | Balance sheets (Amounts in US$) December 31, December 31, 2018 2017 Assets Current assets Cash and cash equivalents $ - $ 34,686 Total current assets - 34,586 Non-current assets Long term investment 28,819,885 25,000,970 Total non-current assets 28,819,885 25,000,970 Total assets $ 28,819,885 $ 25,035,556 Liabilities and Shareholders’ Equity Current Liabilities Accrued expenses and other liabilities $ 448 $ 5,448 Total current liabilities 448 5,448 Total liabilities 448 5,448 Shareholders’ Equity Preferred stock (No par value, Unlimited number authorized, Issued and outstanding: none) - - Common stock (No par value, Unlimited number authorized, 28,030,010 shares issued and outstanding as of December 31, 2018 and 2017) - - Additional paid in capital 7,057,676 7,057,676 Retained earnings 22,598,718 17,414,167 Accumulated other comprehensive (loss) income (836,957 ) 558,265 Total Shareholders’ Equity 28,819,437 25,030,108 Total liabilities and shareholders’ equity $ 28,819,885 $ 25,035,556 |
Schedule of condensed income statement | Statement of Operation (Amounts in US$) For the Year Ended For the Year Ended December 31, December 31, 2018 2017 Operating expenses: General and administrative expenses $ 266,288 $ 815 Research and development expenses 3,000 - Total operating expenses 269,288 815 Loss from Operations (269,288 ) (815 ) Other expenses (298 ) (47 ) Share of income from subsidiaries 5,454,137 11,882,337 Income before income taxes 5,184,551 11,881,475 Income tax expense - - Net income $ 5,184,551 $ 11,881,475 |
Schedule of condensed cash flow statement | Statement of Cash Flows (Amounts in US$) For the Year Ended For the Year Ended December 31, December 31, 2018 2017 Cash flows from operating activities $ (274,586 ) $ 4,586 Cash flows from investing activities - - Cash flows from financing activities 240,000 30,000 Effects of exchange rate changes on cash and cash equivalents - - Net (decrease) increase in cash and cash equivalents (34,586 ) 34,586 Cash and cash equivalents, beginning of year 34,586 - Cash and cash equivalents, end of year $ - $ 34,586 |
DESCRIPTION OF BUSINESS AND O_3
DESCRIPTION OF BUSINESS AND ORGANIZATION (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | $ 14,059,288 | $ 29,633,483 |
Non-current assets | 31,510,706 | 22,744,897 |
Total assets | 45,569,994 | 52,378,380 |
Current liabilities | 16,331,849 | 26,041,838 |
Non-current liabilities | 801,139 | |
Total liabilities | 16,331,849 | 26,842,977 |
VIE [Member] | ||
Current assets | 13,250,570 | 29,598,898 |
Non-current assets | 31,510,706 | 22,744,897 |
Total assets | 44,761,276 | 52,343,795 |
Current liabilities | 16,061,399 | 26,006,390 |
Non-current liabilities | 801,139 | |
Total liabilities | $ 16,061,399 | $ 26,807,529 |
DESCRIPTION OF BUSINESS AND O_4
DESCRIPTION OF BUSINESS AND ORGANIZATION (Details 1) | 12 Months Ended |
Dec. 31, 2018 | |
Date of incorporation | Jul. 27, 2017 |
Place of incorporation | Wyoming |
VIE [Member] | Sales director of Kaifeng Jufeel [Member] | |
Date of incorporation | Aug. 5, 2011 |
Place of incorporation | PRC |
Percentage of ownership, additional information | VIE |
Principal activities | Aloe product and distributorship sales |
VIE's Subsidiaries [Member] | Director of Hainan Zhongchen [Member] | |
Date of incorporation | Jul. 3, 2001 |
Place of incorporation | PRC |
Percentage of ownership, additional information | 70% owned by Kaifeng Jufeel |
Principal activities | Aloe material production and sales |
VIE's Subsidiaries [Member] | Suzhou Yihuotong [Member] | |
Date of incorporation | Aug. 10, 2016 |
Place of incorporation | PRC |
Percentage of ownership, additional information | 100% owned by Kaifeng Jufeel |
Principal activities | Aloe product sales |
VIE's Subsidiaries [Member] | General manager of Wuxi Jufeel [Member] | |
Date of incorporation | Oct. 11, 2016 |
Place of incorporation | PRC |
Percentage of ownership, additional information | 80% owned by Kaifeng Jufeel |
Principal activities | Aloe product production and sales |
VIE's Subsidiaries [Member] | Changzhou Jufeel [Member] | |
Date of incorporation | May 23, 2017 |
Place of incorporation | PRC |
Percentage of ownership, additional information | 70% owned by Kaifeng Jufeel and 30% owned by Wuxi Jufeel |
Principal activities | Aloe product production and sales |
Wholly Owned Subsidiaries [Member] | Jufeel Holdings [Member] | |
Date of incorporation | May 10, 2017 |
Place of incorporation | British Virgin Islands |
Percentage of ownership | 100.00% |
Principal activities | Investment holding |
Wholly Owned Subsidiaries [Member] | Ivan International [Member] | |
Date of incorporation | Apr. 23, 2015 |
Place of incorporation | Hong Kong |
Percentage of ownership | 100.00% |
Principal activities | Investment holding |
Wholly Owned Subsidiaries [Member] | Ivan King [Member] | |
Date of incorporation | Aug. 9, 2017 |
Place of incorporation | PRC |
Percentage of ownership | 100.00% |
Principal activities | Consultancy service |
DESCRIPTION OF BUSINESS AND O_5
DESCRIPTION OF BUSINESS AND ORGANIZATION (Details Narrative) - USD ($) | Jun. 07, 2017 | Aug. 05, 2011 | Aug. 22, 2017 | Feb. 28, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 24, 2017 | May 23, 2017 | Oct. 31, 2016 | Oct. 11, 2016 | Dec. 31, 2012 |
Date of incorporation | Jul. 27, 2017 | ||||||||||
State of incorporation | Wyoming | ||||||||||
Common stock shares issued | 28,030,010 | 28,030,010 | |||||||||
Common stock shares outstanding | 28,030,010 | 28,030,010 | |||||||||
Description of ownership percentage and equity interest | Kaifeng Jufeel was 49% owned by Mr. Zhang and 51% owned by Henan Jufeel Technology Group Co., Ltd. ("Henan Jufeel"), an entity owned by Mr. Zhang, before September 23, 2016. From September 23, 2016 to October 24, 2017, Mr. Zhang contributed 32.5% of the equity interests of Kaifeng Jufeel to certain shareholders (see Note 16 for details). After the contribution, Mr. Zhang owns 67.5% of the equity interests of Kaifeng Jufeel | ||||||||||
Shareholder's Voting Proxy Agreement [Member] | |||||||||||
Description for the term of agreement | The Shareholder’s Voting Proxy Agreement has a term of 10 years and will be mutually extended on each 10-year anniversary; provided, that in the event of the termination of the Business Operations Agreement, the Shareholder’s Voting Proxy Agreements will automatically terminate | ||||||||||
Mr. Zhang [Member] | |||||||||||
Shares of Ivan transferred to related party, value | $ 1,200 | ||||||||||
Ownership interest of Kaifeng Jufeel hold by related party | 49.00% | ||||||||||
Common stock shares issued | 18,892,943 | ||||||||||
Common stock shares outstanding | 28,030,010 | ||||||||||
Equity method investment, shares owned | 18,892,943 | ||||||||||
Ownership percentage hold by related party | 67.40% | ||||||||||
Mr. Zhang [Member] | September 23, 2016 To October 24, 2017 [Member] | |||||||||||
Ownership interest of Kaifeng Jufeel acquired by related party | 32.50% | ||||||||||
Jufeel Wyoming [Member] | on September 15, 2017 and October 24, 2017 [Member] | |||||||||||
Additional shares issued to Mr. Zhang and employees by related party | 27,830,000 | ||||||||||
Henan Jufeel [Member] | |||||||||||
Ownership interest of Kaifeng Jufeel hold by related party | 51.00% | ||||||||||
Former Shareholders [Member] | |||||||||||
Common stock shares issued | 30,010 | ||||||||||
Mrs. Zhang [Member] | |||||||||||
Common stock shares issued | 170,000 | ||||||||||
Jufeel Nevada [Member] | |||||||||||
Equity method investments, consideration transferred | $ 120,000 | ||||||||||
Common stock shares issued | 200,010 | ||||||||||
Common stock shares outstanding | 200,010 | ||||||||||
Reverse stock split | 1-for-500 | ||||||||||
General manager of Wuxi Jufeel [Member] | |||||||||||
Ownership interest of Changzhou Jufeel hold by related party | 30.00% | ||||||||||
Non-controlling interests | 20.00% | ||||||||||
Sales director of Kaifeng Jufeel [Member] | |||||||||||
Ownership interest of Kaifeng Jufeel hold by related party | 67.50% | ||||||||||
Ownership interest of Hainan Zhongchen hold by related party | 70.00% | ||||||||||
Ownership interest of Wuxi Jufeel hold by related party | 80.00% | ||||||||||
Ownership interest of Changzhou Jufeel hold by related party | 70.00% | ||||||||||
Mr. Lu Dajie [Member] | |||||||||||
Ownership interest of Wuxi Jufeel hold by related party | 20.00% | ||||||||||
Henan Jufeel Technology Investment Co., Ltd. [Member] | |||||||||||
Ownership interest of Wuxi Jufeel hold by related party | 10.00% | ||||||||||
Mrs. Zhang Yi [Member] | |||||||||||
Ownership interest of Wuxi Jufeel hold by related party | 70.00% | ||||||||||
Director of Hainan Zhongchen [Member] | |||||||||||
Equity method investments, consideration transferred | $ 3,103,133 | ||||||||||
Jufeel Technology and Trading Co., Ltd. [Member] | |||||||||||
Ownership interest of Hainan Zhongchen hold by related party | 70.00% | ||||||||||
Jufeel Holdings [Member] | |||||||||||
Ownership interest of Ivan hold by related party | 100.00% |
SUMMARIES OF SIGNIFICANT ACCO_4
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Buildings [Member] | |
Estimated useful lives | 20 years |
Machinery and equipment [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Machinery and equipment [Member] | Maximum [Member] | |
Estimated useful lives | 11 years |
Furniture and office equipment [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Furniture and office equipment [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Motor Vehicles [Member] | Minimum [Member] | |
Estimated useful lives | 4 years |
Motor Vehicles [Member] | Maximum [Member] | |
Estimated useful lives | 8 years |
Leasehold improvements [Member] | Minimum [Member] | |
Estimated useful lives | 10 years |
Leasehold improvements [Member] | Maximum [Member] | |
Estimated useful lives | 20 years |
SUMMARIES OF SIGNIFICANT ACCO_5
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD | Dec. 31, 2018$ / shares | Dec. 31, 2017$ / shares | Dec. 31, 2016$ / shares |
Foreign currency translation exchange rates | 6.8632 | 6.5342 | 6.9370 |
Foreign currency translation exchange average rates | $ 6.6174 | $ 6.7518 | $ 6.6423 |
SUMMARIES OF SIGNIFICANT ACCO_6
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summaries Of Significant Accounting Policies Details 2Abstract | ||
Net income attributable to Jufeel International Group | $ 5,184,551 | $ 11,881,475 |
Weighted-average shares outstanding basic and diluted: -Common stock issued and outstanding | 28,030,010 | 28,030,010 |
Basic and diluted earnings per share | $ 0.18 | $ 0.42 |
SUMMARIES OF SIGNIFICANT ACCO_7
SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for doubtful accounts | $ 74,145 | $ 74,621 |
Inventory, impairment charge | 18,976 | |
Deferred inventory costs | 1,391,066 | 1,922,486 |
Deferred revenue | 3,546,584 | 7,571,026 |
Total shipping and handling costs | $ 223,121 | 286,431 |
Value added taxes, description | The Company was subject to VAT at the rate of 17% on sales of its products (before May 1, 2018), and 11% on sales of the agricultural products (before May 1, 2018) and at the rate of 6% of its membership revenue. The PRC government has announced VAT reduction, which was effected in May 2018. Therefore, on and after May 1, 2018, the Company is subject to VAT at the rate of 16% on sales of its products, and 10% on sales of the agricultural products and at the rate of 6% of its membership revenue, which the Company issued membership fee VAT invoices though membership fees are recognized with the sales of aloe products as a single unit of accounting under US GAAP. The Company is also subject to surcharges, which includes urban maintenance and construction taxes and additional education fees on VAT payable in accordance with PRC law. The surcharges are at the rate of 12% of the VAT payable, depending on which tax jurisdiction the Companys PRC operating subsidiaries and the VIE operate in. | |
Accounts receivable, collected | $ 7,466,669 | |
Land use rights [Member] | ||
Intangible assets useful lives | 50 years | |
Subsequent Event [Member] | ||
Accounts receivable, collected | $ 3,087,124 | |
Deferred inventory costs released to cost of revenue | $ 1,220,432 |
SIGNIFICANT RISKS (Details)
SIGNIFICANT RISKS (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Customer A [Member] | ||
Concentration risk percentage, sales | 31.00% | 20.00% |
Customer B [Member] | ||
Concentration risk percentage, sales | 28.00% | 15.00% |
Customer C [Member] | ||
Concentration risk percentage, sales | 7.00% | 11.00% |
SIGNIFICANT RISKS (Details 1)
SIGNIFICANT RISKS (Details 1) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Customer A [Member] | ||
Concentration risk percentage, accounts receivable | 62.00% | 39.00% |
Customer D Member] | ||
Concentration risk percentage, accounts receivable | 12.00% | |
Customer B [Member] | ||
Concentration risk percentage, accounts receivable | 52.00% |
SIGNIFICANT RISKS (Details Narr
SIGNIFICANT RISKS (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Cash and cash equivalents | $ 4,914,748 | $ 16,391,266 | $ 1,902,197 |
PRC [Member] | |||
Cash and cash equivalents | 4,907,519 | $ 16,341,475 | |
People's bank of China, insured limits | $ 72,852 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts Receivable Net Details Abstract | ||
Accounts receivable | $ 3,677,706 | $ 7,676,824 |
Allowance | (71,046) | (62,992) |
Accounts receivable, net | $ 3,606,660 | $ 7,613,832 |
ACCOUNTS RECEIVABLE, NET (Det_2
ACCOUNTS RECEIVABLE, NET (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts Receivable Net Details 1Abstract | ||
Balance at beginning of the year | $ 62,992 | |
Addition | 11,485 | 60,962 |
Exchange translation adjustment | (3,431) | 2,030 |
Balance at end of the year | $ 71,046 | $ 62,992 |
ACCOUNTS RECEIVABLE, NET (Det_3
ACCOUNTS RECEIVABLE, NET (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts Receivable Net Details Narrative Abstract | |||
Allowance for doubtful accounts | $ 71,046 | $ 62,992 | |
Allowance for doubtful accounts, additions | $ 11,485 | $ 60,962 |
LOANS TO THIRD PARTIES (Details
LOANS TO THIRD PARTIES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Loans to third parties | $ 823,231 | $ 306,510 |
Loan to third party A [Member] | ||
Loans to third parties | 648,386 | |
Loan to third party B [Member] | ||
Loans to third parties | 174,845 | |
Loan to third party C [Member] | ||
Loans to third parties | $ 306,510 |
LOANS TO THIRD PARTIES (Detai_2
LOANS TO THIRD PARTIES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2019 | Oct. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Loan to third party principal amount | $ 5,417,516 | $ 296,217 | ||
Repayment of loan | 4,866,365 | |||
Loan to third party A [Member] | ||||
Repayment of loan | $ 300,000 | |||
Terms of extension agreement | Agreed to repay the remaining balance in March 2019 with an annual interest rate of 4.5% | |||
Loan to third party A [Member] | June 2018 To September 2018 [Member] | ||||
Loan to third party principal amount | 5,200,000 | |||
Loan to third party A [Member] | August 2018 To September 2018 [Member] | ||||
Repayment of loan | $ 4,300,000 | |||
Terms of extension agreement | Agreed to repay the remaining balance in January 2019 with an annual interest rate of 4.5% for the remaining balance | |||
Loan to third party A And B [Member] | September 2018 To January 2019 [Member] | ||||
Interest amount waived | $ 200,000 | |||
Loan to third party C [Member] | ||||
Description for the term of loan | From December 2017 to February 2018 | |||
Operating loan, interest rate | 3.60% |
OTHER RECEIVABLES, NET (Details
OTHER RECEIVABLES, NET (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Other receivables | $ 169,406 | $ 525,998 |
Allowance | (3,099) | (11,629) |
Other receivables, net | 166,307 | 514,369 |
Staff Advance [Member] | ||
Other receivables, net | 135,258 | 84,996 |
Others [Member] | ||
Other receivables, net | $ 34,148 | $ 441,002 |
OTHER RECEIVABLES, NET (Detai_2
OTHER RECEIVABLES, NET (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Balance at beginning of the year | $ (11,629) | |
Addition | 11,485 | $ 60,962 |
Exchange translation adjustment | (3,431) | 2,030 |
Balance at end of the year | (3,099) | (11,629) |
Allowance For Doubtful Account [Member] | ||
Balance at beginning of the year | 11,629 | |
Addition | 11,254 | |
Reversal | (8,269) | |
Exchange translation adjustment | (261) | 375 |
Balance at end of the year | $ 3,099 | $ 11,629 |
OTHER RECEIVABLES, NET (Detai_3
OTHER RECEIVABLES, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Potential farmland lease, advances given to an employee | $ 306,082 | |
Allowance For Doubtful Account [Member] | ||
Reversal | $ 8,269 |
PREPAYMENTS (Details)
PREPAYMENTS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Prepayment | $ 1,048,188 | $ 2,087,131 |
Prepaid Service Fee And Others [Member] | ||
Prepayment | 20,644 | 741,565 |
Prepayments For Inventory Purchase [Member] | ||
Prepayment | $ 1,027,544 | $ 1,345,566 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventories | $ 2,109,088 | $ 797,889 |
Raw materials [Member] | ||
Inventories | 119,222 | 53,129 |
Packaging Materials [Member] | ||
Inventories | 297,995 | 70,187 |
Finished Goods [Member] | ||
Inventories | 1,419,121 | 478,396 |
Work in progress [Member] | ||
Inventories | $ 272,750 | $ 196,177 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, plant and equipment gross | $ 6,834,972 | $ 2,616,950 |
Less: accumulated depreciation | (2,042,794) | (1,822,942) |
Property, plant and equipment | 4,792,178 | 794,008 |
Add: construction in process | 21,917,871 | 12,364,717 |
Property, plant and equipment, net | 26,710,049 | 13,158,725 |
Buildings [Member] | ||
Property, plant and equipment gross | 2,733,242 | |
Machinery and equipment [Member] | ||
Property, plant and equipment gross | 2,458,479 | 1,483,519 |
Furniture And Office Equipment [Member] | ||
Property, plant and equipment gross | 538,281 | 471,197 |
Motor Vehicles [Member] | ||
Property, plant and equipment gross | 393,254 | 385,665 |
Leasehold Improvements [Member] | ||
Property, plant and equipment gross | $ 711,716 | $ 276,569 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Depreciation expense | $ 379,372 | $ 125,519 |
Construction cost of factory and office building in Kaifeng | 17,500,000 | |
Jiangnan Rural Commercial Bank [Member] | ||
Carrying value pledged against a credit facility | $ 1,404,840 |
LAND USE RIGHT, NET (Details)
LAND USE RIGHT, NET (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Land Use Right Net Details Abstract | ||
Land use right, cost | $ 2,404,587 | $ 2,525,658 |
Less: Accumulated amortization | (152,376) | (109,445) |
Land use right, net | $ 2,252,211 | $ 2,416,213 |
LAND USE RIGHT, NET (Details Na
LAND USE RIGHT, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Land use right description | The Company received land use rights for a period of 50 years with land sizes of approximately 75,000 square meters, of industrial land in Kaifeng, China from Henan Kaifeng Municipal People’s Government. | |
Payments for land use right | $ 2,500,000 | |
Amortization expense | 49,967 | $ 48,885 |
Amortization expense expected to be recognized in year one | 48,000 | |
Amortization expense expected to be recognized in year two | 48,000 | |
Amortization expense expected to be recognized in year three | 48,000 | |
Amortization expense expected to be recognized in year four | 48,000 | |
Amortization expense expected to be recognized in year five | $ 48,000 | |
Land use rights [Member] | ||
Intangible assets useful lives | 50 years |
EQUIPMENT RELATED PREPAYMENTS (
EQUIPMENT RELATED PREPAYMENTS (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Agent [Member] | |
Prepayments for equipment purchase | $ 3,060,818 |
LONG TERM PREPAYMENTS AND OTH_3
LONG TERM PREPAYMENTS AND OTHER NON-CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Long term prepayments and other non-current assets | $ 2,171,508 | $ 3,140,944 |
Prepaid Farmland Lease [Member] | ||
Long term prepayments and other non-current assets | 1,962,580 | 2,192,474 |
Cooperation Deposit [Member] | ||
Long term prepayments and other non-current assets | 918,246 | |
Others [Member] | ||
Long term prepayments and other non-current assets | $ 208,928 | $ 30,224 |
LONG TERM PREPAYMENTS AND OTH_4
LONG TERM PREPAYMENTS AND OTHER NON-CURRENT ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Amortization expense | $ 179,395 | $ 175,737 |
Farmland Lease [Member] | ||
Amortization expense | $ 129,428 | $ 126,852 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Other Current Liabilities Details Abstract | ||
Employee reimbursement payables | $ 95,764 | $ 124,630 |
Rental payables | 122,256 | 21,897 |
Construction related payables | 328,441 | 236,102 |
Farmland lease payable (see Note 14) | 762,735 | |
Others | 199,623 | 223,345 |
Accrued expenses and other liabilities | 1,508,819 | 605,974 |
Other taxes payables | $ 2,231,903 | $ 4,973,474 |
FARMLAND LEASE PAYABLE (Details
FARMLAND LEASE PAYABLE (Details Narrative) - Lease Agreements [Member] - Duncha [Member] | 1 Months Ended |
Jun. 30, 2013USD ($) | |
Total consideration for lease payable | $ 1,101,895 |
Lease term | 30 years |
Lease term description | The term of 30 years from 2013 to 2043 |
Lease payment description | The Company paid $300,756 in 2013 and delayed the payment of the remaining balance because the farmland was affected by typhoon subsequently |
LIABILITY UNDER LINE OF CREDIT
LIABILITY UNDER LINE OF CREDIT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Line of Credit | $ 874,228 | ||
Credit Facility Agreement [Member] | Pledged [Member] | |||
Line of Credit | $ 1,404,840 | ||
Credit Facility Agreement [Member] | Jiangnan Rural Commercial Bank [Member] | |||
Line of Credit | $ 1,756,047 | ||
Line of credit term | 3 years | ||
Line of credit facility description | term from September 2018 to September 2021 | ||
Loan principal amount | $ 874,228 | ||
Interest rate | 6.00% | ||
Loan period | September 2018 to September 2019 | ||
Purchase Agreement [Member] | Changzhou Jufeel [Member] | |||
Repayment of loan | 874,228 | ||
Monthly interest | $ 4,297 |
RELATED PARTY BALANCE AND TRA_3
RELATED PARTY BALANCE AND TRANSACTIONS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |||
Amount due to related parties | $ 1,751,914 | $ 705,441 | |||
Henan Jufeel Technology Investment Co., Ltd. [Member] | |||||
Amount due to related parties | 1,593,931 | [1] | 514,145 | [2],[3] | |
Mr. Zhang [Member] | |||||
Amount due to related parties | [1] | 157,617 | 104,337 | ||
Sales director of Kaifeng Jufeel [Member] | |||||
Amount due to related parties | [1] | 29,891 | |||
General manager of Wuxi Jufeel [Member] | |||||
Amount due to related parties | [1] | 366 | 56,242 | ||
Director of Hainan Zhongchen [Member] | |||||
Amount due to related parties | [1] | $ 826 | |||
[1] | (b) These balances were mainly advance to the Company for operating capital. | ||||
[2] | (a) The balance due to Henan Jufeel Technology Investment Co., Ltd. mainly consisted of an advance received by Hainan Zhongchen for aloe products purchase net of its payments made on behalf of Kaifeng Jufeel and Jufeel Wyoming. | ||||
[3] | (i) This Company is under common control of Mr. Zhang. |
RELATED PARTY BALANCE AND TRA_4
RELATED PARTY BALANCE AND TRANSACTIONS (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Related Party Balance And Transactions Details 1Abstract | |||
Related parties paid back the collected sales proceeds (1) | [1] | $ 3,728,337 | |
Related parties advance to the Company for operation (2) | [2] | 997,536 | |
Payment on behalf of Kaifeng Jufeel for construction vendors (3) | [3] | 151,116 | |
Collection from a related party for the payment on behalf (4) | [4] | 1,080,466 | |
Payment on behalf of a related party in operation (5) | [5] | 1,382,698 | |
Loans repaid from related parties (6) | [6] | 8,704,916 | |
Sales to related parties (7) | [7] | 63,985 | 285,874 |
Lease from related parties (8) | [8] | $ 380,976 | $ 349,141 |
[1] | 1. Related parties paid back the collected sales proceeds During years ended December 31, 2018 and 2017, the related parties paid back the collected sales proceeds on behalf of Kaifeng Jufeel in the amount of $nil and $3,728,337, respectively. | ||
[2] | 2. Related parties advance to the Company for operation During years ended December 31, 2018 and 2017, the related parties advance to the Company for operation in the amount of $997,536 and $nil, respectively. | ||
[3] | 3. Payment on behalf of Kaifeng Jufeel for construction vendors During years ended December 31, 2018 and 2017, a related party paid on behalf of Kaifeng Jufeel for the construction vendors in the amount of $151,116 and $nil, respectively. | ||
[4] | 4. Collection from a related party for the payment on behalf During years ended December 31, 2018 and 2017, Ivan King collected from Henan Jufeel Technology Investment Co., Ltd. for the payment on behalf in the amount of $1,080,466 and $nil, respectively | ||
[5] | 5. Payment on behalf of a related party in operation During years ended December 31, 2018 and 2017, Kaifeng Jufeel and Ivan King paid on behalf of Henan Jufeel Technology Investment Co., Ltd. for operating expenses the amount of $1,382,698 and $nil, respectively. Ivan King has collected from the related party during the year ended December 31, 2018. | ||
[6] | 6. Loans repaid from related parties During years ended December 31, 2018 and 2017, Jufeel Technology and Trading Co., Ltd. and Mr. Zhang have paid back to the Company amount $nil and $8,704,916, respectively. All the loans were no interest bearing and due on demand. | ||
[7] | 7. Sales to related parties During years ended December 31, 2018 and 2017, the Company's product sales to Henan Jufeel Technology Investment Co., Ltd and other related parties totaled $63,985 and $285,874 respectively. | ||
[8] | 8. Lease from related parties Starting from 2015, the Company leased two floors of an office building from Mr. Zhang and Mrs. Guo Li. The contract periods were from September 2015 with annual rental of approximately $272,189 and renewed in September 2018. The lease agreement is expected to be renewed annually. Starting from the year ended December 31, 2015, the Company leased four vehicles from Mr. Zhang. The contract term was from January 1, 2015 to December 31, 2016 with the annual rental of approximately $108,787 and renewed in January 2018. The lease agreement is expected to be renewed when expire. Expense recorded under these leases during years ended December 31, 2018 and 2017 were $380,976 and $349,141 respectively. |
SHAREHOLDER CONTRIBUTION (Detai
SHAREHOLDER CONTRIBUTION (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Sep. 23, 2016 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | |
Expenses total | $ 2,208,348 | |||
Compensation expense | $ 111,823 | |||
Sales director of Kaifeng Jufeel [Member] | ||||
Equity interests | 1.32% | |||
Fair value of equity interests | $ 155,166 | |||
Terminal growth rate | 3.00% | |||
Discount rate | 15.00% | |||
Sales director of Kaifeng Jufeel [Member] | Minimum [Member] | ||||
Revenue growth rate | 9.10% | |||
Sales director of Kaifeng Jufeel [Member] | Maximum [Member] | ||||
Revenue growth rate | 12.50% | |||
Sales director of Kaifeng Jufeel [Member] | Service Providers And Cooperation Partners [Member] | ||||
Equity interests | 25.95% | |||
Fair value of equity interests | $ 3,040,448 | |||
Terminal growth rate | 3.00% | |||
Discount rate | 15.00% | |||
Sales director of Kaifeng Jufeel [Member] | Service Providers And Cooperation Partners [Member] | Minimum [Member] | ||||
Revenue growth rate | 9.10% | |||
Sales director of Kaifeng Jufeel [Member] | Service Providers And Cooperation Partners [Member] | Maximum [Member] | ||||
Revenue growth rate | 12.50% | |||
Mr. Zhang [Member] | Service Providers And Cooperation Partners [Member] | ||||
Penalty percentage | 15.00% | |||
Mr. Zhang and Henan Jufeel [Member] | ||||
Equity interests | 5.21% | |||
Fair value of equity interests | $ 758,929 | |||
Sales promotion period | September 23, 2016 to December 31, 2016 | |||
Terminal growth rate | 3.00% | |||
Discount rate | 15.00% | |||
Mr. Zhang and Henan Jufeel [Member] | Minimum [Member] | ||||
Revenue growth rate | 9.10% | |||
Mr. Zhang and Henan Jufeel [Member] | Maximum [Member] | ||||
Revenue growth rate | 12.50% |
BENEFIT PLAN (Details Narrative
BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Benefit Plan | ||
Total benefits paid | $ 162,763 | $ 84,460 |
TAXATION (Details)
TAXATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Taxation Details Abstract | ||
Current income tax | $ 1,080,423 | $ 3,029,192 |
Deferred income tax | 3,061 | |
Income tax expense | $ 1,080,423 | $ 3,032,253 |
TAXATION (Details 1)
TAXATION (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Taxation Details 1Abstract | ||
Income before income taxes | $ 6,200,293 | $ 15,204,908 |
PRC statutory tax rate | 25.00% | 25.00% |
Income tax expense computed at PRC tax rate | $ 1,550,073 | $ 3,801,227 |
Reconciling items: | ||
Effect of preferential tax rate | (634,943) | (1,371,239) |
Non-deductible expenses | 36,173 | 606,409 |
Expired tax attribute carryforwards | 90,805 | 36,499 |
Others | 6,449 | |
Changes in valuation allowance | 38,315 | (47,092) |
Effective income tax expense | $ 1,080,423 | $ 3,032,253 |
TAXATION (Details 2)
TAXATION (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Taxation Details 2Abstract | ||
Balance at beginning of the year | $ 431,503 | $ 429,299 |
Current year movement | 38,315 | (47,092) |
Foreign currency translation adjustments | (43,260) | 49,296 |
Balance at end of the year | $ 426,558 | $ 431,503 |
TAXATION (Details 3)
TAXATION (Details 3) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Taxation Details 3Abstract | |||
Tax effect of net operating losses carried forward | $ 410,004 | $ 418,572 | |
Allowance for doubtful accounts and inventory impairment | 16,554 | 12,931 | |
Valuation allowance | (426,558) | (431,503) | $ (429,299) |
Deferred tax assets, net |
TAXATION (Details 4)
TAXATION (Details 4) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Taxation Details 4Abstract | |
2019 | $ 363,221 |
2020 | 176,016 |
2021 | 627,764 |
2022 | 362,385 |
2023 | 299,901 |
Total | $ 1,829,287 |
TAXATION (Details Narrative)
TAXATION (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative asset, fair value | $ 1,113 | ||
New effective income tax rate | 21.00% | ||
PRC statutory tax rate | 25.00% | 25.00% | |
VIE's Subsidiaries [Member] | PRC [Member] | |||
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2023 | ||
Operating loss carryforwards, limitations on use | Act imposes an annual limit of 80% on the amount of taxable income that can be offset by net operating loss arising in tax years ending after December 31, 2017. | ||
Sales director of Kaifeng Jufeel [Member] | |||
Description of favorable statutory tax rate | The favorable statutory tax rate of 15% in years ended December 31, 2015, 2016 and 2017. Kaifeng Jufeel has renewed the High and New Technology Enterprise qualification and has been approved by the local tax authorities in December 2018 and still enjoy the 15% favorable tax rate for the years ending December 31, 2018, 2019 and 2020. Therefore, for the years ended December 31, 2018 and 2017, the applicable income tax rate of Kaifeng Jufeel Biotech Co, Ltd. was 15%. |
SECURITIES (Details Narrative)
SECURITIES (Details Narrative) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Oct. 24, 2017 | |
Date of incorporation | Jul. 27, 2017 | ||
State of incorporation | Wyoming | ||
Common Stock, shares issued | 28,030,010 | 28,030,010 | |
Common Stock, shares outstanding | 28,030,010 | 28,030,010 | |
Mr. Zhang [Member] | |||
Common Stock, shares issued | 18,892,943 | ||
Common Stock, shares outstanding | 28,030,010 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 17,633,288 | $ 27,863,972 |
Cost of revenue | 4,569,593 | 4,192,648 |
Total operating expenses | 6,849,442 | 8,534,618 |
Operating income (loss) | 6,214,253 | 15,136,706 |
Net income (loss) | 5,119,870 | 12,172,655 |
Total assets – December 31, 2018 | 45,569,994 | 52,378,380 |
Sales Revenue, Net [Member] | ||
Revenues | 17,633,288 | 27,863,972 |
Cost of revenue | 4,569,593 | 4,192,648 |
Total operating expenses | 4,942,290 | 3,561,730 |
Unallocated corporate expenses | 1,907,152 | 4,972,888 |
Operating income (loss) | 6,214,253 | 15,136,706 |
Net income (loss) | 5,119,870 | 12,172,655 |
Segment assets | 44,761,276 | 52,343,794 |
Unallocated assets | 808,718 | 34,586 |
Total assets – December 31, 2018 | 45,569,994 | 52,378,380 |
Aloe Product Sales [Member] | ||
Revenues | 20,562,273 | 34,264,243 |
Cost of revenue | 8,241,218 | 11,290,537 |
Total operating expenses | 3,908,759 | 2,863,768 |
Unallocated corporate expenses | ||
Operating income (loss) | 8,412,296 | 20,109,938 |
Net income (loss) | 7,309,224 | 17,084,396 |
Segment assets | 46,762,137 | 52,047,816 |
Unallocated assets | ||
Total assets – December 31, 2018 | 46,762,137 | 52,047,816 |
Aloe Material Sales [Member] | ||
Revenues | 2,034,142 | 2,754,634 |
Cost of revenue | 1,280,284 | 1,848,718 |
Total operating expenses | 1,045,715 | 880,463 |
Unallocated corporate expenses | ||
Operating income (loss) | (291,857) | 25,453 |
Net income (loss) | (293,069) | 88,028 |
Segment assets | 3,871,395 | 4,315,348 |
Unallocated assets | ||
Total assets – December 31, 2018 | 3,871,395 | 4,315,348 |
Inter Segment And Reconciling Item [Member] | ||
Revenues | (4,963,127) | (9,154,905) |
Cost of revenue | (4,951,909) | (8,946,607) |
Total operating expenses | (12,184) | (182,501) |
Unallocated corporate expenses | ||
Operating income (loss) | 966 | (25,797) |
Net income (loss) | 966 | (25,797) |
Segment assets | (5,872,256) | (4,019,370) |
Unallocated assets | ||
Total assets – December 31, 2018 | $ (5,872,256) | $ (4,019,370) |
COMMITMENT (Details)
COMMITMENT (Details) | Dec. 31, 2018USD ($) |
Commitment Details Abstract | |
2019 | $ 890,230 |
2020 | 657,083 |
2021 | 101,917 |
2022 | 37,883 |
2023 | 37,883 |
Thereafter | 717,353 |
Total | $ 2,442,349 |
COMMITMENT (Details Narrative)
COMMITMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitment Details Narrative Abstract | ||
Lease rental expense | $ 1,249,332 | $ 693,645 |
Committed capital | $ 2,104,857 |
ADDITIONAL INFORMATION CONDEN_3
ADDITIONAL INFORMATION CONDENSED FINANCIAL STATEMENTS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | |||
Cash and cash equivalents | $ 4,914,748 | $ 16,391,266 | $ 1,902,197 |
Total current assets | 14,059,288 | 29,633,483 | |
Non-current assets | |||
Total non-current assets | 31,510,706 | 22,744,897 | |
Total assets | 45,569,994 | 52,378,380 | |
Current Liabilities | |||
Total current liabilities | 16,331,849 | 26,041,838 | |
Total liabilities | 16,331,849 | 26,842,977 | |
Shareholders’ Equity | |||
Preferred stock (No par value, Unlimited number authorized, Issued and outstanding: none) | |||
Common stock (No par value, Unlimited number authorized, 28,030,010 shares issued and outstanding as of December 31, 2018 and 2017) | |||
Additional paid in capital | 7,057,676 | 7,057,676 | |
Retained earnings | 20,787,143 | 15,634,756 | |
Total Shareholders’ Equity | 29,238,145 | 25,535,403 | $ 9,071,284 |
Total liabilities and shareholders’ equity | 45,569,994 | 52,378,380 | |
Condensed balance sheet [Member] | |||
Current assets | |||
Cash and cash equivalents | 34,686 | ||
Total current assets | 34,586 | ||
Non-current assets | |||
Long term investment | 28,819,885 | 25,000,970 | |
Total non-current assets | 28,819,885 | 25,000,970 | |
Total assets | 28,819,885 | 25,035,556 | |
Current Liabilities | |||
Accrued expenses and other liabilities | 448 | 5,448 | |
Total current liabilities | 448 | 5,448 | |
Total liabilities | 448 | 5,448 | |
Shareholders’ Equity | |||
Preferred stock (No par value, Unlimited number authorized, Issued and outstanding: none) | |||
Common stock (No par value, Unlimited number authorized, 28,030,010 shares issued and outstanding as of December 31, 2018 and 2017) | |||
Additional paid in capital | 7,057,676 | 7,057,676 | |
Retained earnings | 22,598,718 | 17,414,167 | |
Accumulated other comprehensive (loss) income | (836,957) | 558,265 | |
Total Shareholders’ Equity | 28,819,437 | 25,030,108 | |
Total liabilities and shareholders’ equity | $ 28,819,885 | $ 25,035,556 |
ADDITIONAL INFORMATION CONDEN_4
ADDITIONAL INFORMATION CONDENSED FINANCIAL STATEMENTS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating expenses: | ||
General and administrative expenses | $ 4,951,022 | $ 5,253,734 |
Research and development expenses | 979,944 | 596,297 |
Total operating expenses | 6,849,442 | 8,534,618 |
Loss from Operations | 6,214,253 | 15,136,706 |
Income tax expense | 1,080,423 | 3,032,253 |
Net income | 5,119,870 | 12,172,655 |
Condensed statement of operation [Member] | ||
Operating expenses: | ||
General and administrative expenses | 266,288 | 815 |
Research and development expenses | 3,000 | |
Total operating expenses | 269,288 | 815 |
Loss from Operations | (269,288) | (815) |
Other expenses | (298) | (47) |
Share of income from subsidiaries | 5,454,137 | 11,882,337 |
Income before income taxes | 5,184,551 | 11,881,475 |
Income tax expense | ||
Net income | $ 5,184,551 | $ 11,881,475 |
ADDITIONAL INFORMATION CONDEN_5
ADDITIONAL INFORMATION CONDENSED FINANCIAL STATEMENTS (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | $ (1,107,745) | $ 19,016,978 |
Cash flows from investing activities | (11,038,339) | (5,107,259) |
Cash flows from financing activities | 1,057,813 | |
Effects of exchange rate changes on cash and cash equivalents | (388,247) | 579,350 |
Net (decrease) increase in cash and cash equivalents | (11,476,518) | 14,489,069 |
Cash and cash equivalents, beginning of year | 16,391,266 | 1,902,197 |
Cash and cash equivalents, end of year | 4,914,748 | 16,391,266 |
Condensed statement of cash flow [Member] | ||
Cash flows from operating activities | (274,586) | 4,586 |
Cash flows from investing activities | ||
Cash flows from financing activities | 240,000 | 30,000 |
Effects of exchange rate changes on cash and cash equivalents | ||
Net (decrease) increase in cash and cash equivalents | (34,586) | 34,586 |
Cash and cash equivalents, beginning of year | 34,586 | |
Cash and cash equivalents, end of year | $ 34,586 |
ADDITIONAL INFORMATION CONDEN_6
ADDITIONAL INFORMATION CONDENSED FINANCIAL STATEMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
VIE's Subsidiaries [Member] | PRC [Member] | ||
Restricted net assets | $ 4,900,000 | $ 4,900,000 |