Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information Line Items | |
Entity Registrant Name | Oriental Culture Holding, LTD. |
Trading Symbol | OCG |
Document Type | 20-F |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 21,226,992 |
Amendment Flag | false |
Entity Central Index Key | 0001776067 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2022 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Ex Transition Period | false |
ICFR Auditor Attestation Flag | false |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-39734 |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | Room 1402 |
Entity Address, Address Line Two | Richmake Commercial Building |
Entity Address, Address Line Three | 198-200 Queen’s Road Central |
Entity Address, City or Town | Hong Kong |
Entity Address, Country | HK |
Title of 12(b) Security | Ordinary Shares, par value $0.00005 |
Security Exchange Name | NASDAQ |
Entity Interactive Data Current | Yes |
Document Accounting Standard | U.S. GAAP |
Auditor Firm ID | 2388 |
Auditor Name | Wei, Wei & Co., LLP |
Auditor Location | Flushing, New York |
Entity Address, Postal Zip Code | 00000 |
Business Contact | |
Document Information Line Items | |
Entity Address, Address Line One | Room 1402 |
Entity Address, Address Line Two | Richmake Commercial Building |
Entity Address, Address Line Three | 198-200 Queen’s Road Central |
Entity Address, City or Town | Hong Kong |
Entity Address, Country | HK |
Contact Personnel Name | Yi Shao |
City Area Code | (852) |
Local Phone Number | 2110-3909 |
Entity Address, Postal Zip Code | 00000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and equivalents | $ 17,188,833 | $ 29,398,047 |
Restricted cash | 11,796,388 | |
Short-term investment | 3,748,900 | |
Restricted investment | 4,703,323 | |
Accounts receivable, net | 207 | 47,060 |
Accounts receivable – related party | 29,311 | 8,093 |
Other receivables and prepaid expenses | 4,441,946 | 1,385,394 |
Other receivables - related party | 3,421,345 | 928,913 |
Escrow | 600,000 | 600,000 |
Total current assets | 42,181,353 | 36,116,407 |
PROPERTY AND EQUIPMENT, NET | 9,423,713 | 9,904,289 |
OTHER ASSETS | ||
Certificate of deposit | 3,136,910 | |
Right-of-use assets | 34,345 | 11,494 |
Cost method Investment | 932,552 | 548,151 |
Intangible assets, net | 816,885 | 1,120,021 |
Total other assets | 1,783,782 | 4,816,576 |
Total assets | 53,388,848 | 50,837,272 |
CURRENT LIABILITIES | ||
Accounts payable | 2,959,415 | 1,625,494 |
Accounts payable – related party | 28,727 | |
Deferred revenue | 449,037 | 697,863 |
Other payables and accrued liabilities | 290,150 | 1,284,235 |
Taxes payable | 13,372 | 29,826 |
Lease liability - current | 20,808 | 11,494 |
Total current liabilities | 3,761,509 | 3,648,912 |
OTHER LIABILITIES | ||
Lease liability - noncurrent | 11,491 | |
Total liabilities | 3,773,000 | 3,648,912 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS’ EQUITY | ||
Preferred shares, $0.00005 par value, 100,000,000 shares authorized, no shares issued and outstanding | ||
Ordinary shares, $0.00005 par value, 900,000,000 shares authorized, 30,836,992 and 30,654,712 shares issued, 21,226,992 and 21,044,712 shares outstanding as of December 31, 2022 and December 31, 2021, respectively | 1,542 | 1,533 |
Treasury shares, at cost, 9,610,000 shares | (481) | (481) |
Additional paid-in capital | 22,349,767 | 21,884,962 |
Subscription receivable | (1,000,000) | |
Statutory reserves | 124,757 | 112,347 |
Retained earnings | 28,315,319 | 25,092,043 |
Accumulated other comprehensive income (loss) | (1,175,056) | 1,097,956 |
Total shareholders’ equity | 49,615,848 | 47,188,360 |
Total liabilities and shareholders’ equity | $ 53,388,848 | $ 50,837,272 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred shares, par value (in Dollars per share) | $ 0.00005 | $ 0.00005 |
Preferred shares, shares authorized | 100,000,000 | 100,000,000 |
Preferred shares, shares issued | ||
Preferred shares, shares outstanding | ||
Ordinary shares, par value (in Dollars per share) | $ 0.00005 | $ 0.00005 |
Ordinary shares, shares authorized | 900,000,000 | 900,000,000 |
Ordinary shares, shares issued | 30,836,992 | 30,654,712 |
Ordinary shares, shares outstanding | 21,226,992 | 21,044,712 |
Treasury shares, at cost | 9,610,000 | 9,610,000 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
OPERATING REVENUES: | |||
Net revenues | $ 17,646,814 | $ 37,363,303 | $ 17,225,630 |
Net revenues - related parties | 166,325 | 233,157 | 213,172 |
Total operating revenues | 17,813,139 | 37,596,460 | 17,438,802 |
COST OF REVENUES: | (996,459) | (2,425,420) | (2,642,163) |
GROSS PROFIT | 16,816,680 | 35,171,040 | 14,796,639 |
OPERATING EXPENSES: | |||
Selling and marketing | (7,668,248) | (15,598,482) | (4,242,231) |
Selling and marketing - related party | (43,590) | (359,968) | (1,762,652) |
General and administrative | (6,276,661) | (8,103,840) | (6,943,803) |
General and administrative - related parties | (238,830) | (223,284) | (201,865) |
Total operating expenses | (14,227,329) | (24,285,574) | (13,150,551) |
INCOME FROM OPERATIONS | 2,589,351 | 10,885,466 | 1,646,088 |
OTHER INCOME | |||
Gain from short-term investment | 156,066 | 169,065 | 93,007 |
Interest income | 226,158 | 197,237 | 139,916 |
Other income, net | 268,923 | 192,505 | 169,096 |
Total other income, net | 651,147 | 558,807 | 402,019 |
INCOME BEFORE INCOME TAXES | 3,240,498 | 11,444,273 | 2,048,107 |
PROVISION FOR INCOME TAX | 4,812 | ||
NET INCOME | 3,235,686 | 11,444,273 | 2,048,107 |
OTHER COMPREHENSIVE INCOME (LOSS) | |||
Foreign currency translation adjustment | (2,273,012) | 174,841 | 1,144,657 |
COMPREHENSIVE INCOME | $ 962,674 | $ 11,619,114 | $ 3,192,764 |
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES | |||
Basic (in Shares) | 21,108,143 | 20,484,272 | 15,615,729 |
EARNINGS PER SHARE | |||
Basic (in Dollars per share) | $ 0.15 | $ 0.56 | $ 0.13 |
Consolidated Statements of In_2
Consolidated Statements of Income and Comprehensive Income (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Diluted | 21,108,143 | 20,484,272 | 15,615,729 |
Diluted | $ 0.15 | $ 0.56 | $ 0.13 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders’ Equity - USD ($) | Preferred shares | Ordinary shares | Treasury shares | Additional paid-in capital | Share subscription receivable | Statutory reserves | Retained earnings | Accumulated other comprehensive loss | Total |
Balance at Dec. 31, 2019 | $ 1,240 | $ (481) | $ 1,608,045 | $ 112,347 | $ 11,599,663 | $ (221,542) | $ 13,099,272 | ||
Balance (in Shares) at Dec. 31, 2019 | 24,800,000 | (9,610,000) | |||||||
Issuance of ordinary share through initial public offering, net | $ 256 | 17,276,954 | 17,277,210 | ||||||
Issuance of ordinary share through initial public offering, net (in Shares) | 5,124,400 | ||||||||
Cashless exercise of warrants | $ 7 | (7) | |||||||
Cashless exercise of warrants (in Shares) | 130,312 | ||||||||
Net income | 2,048,107 | 2,048,107 | |||||||
Foreign currency translation | 1,144,657 | 1,144,657 | |||||||
Balance at Dec. 31, 2020 | $ 1,503 | $ (481) | 18,884,992 | 112,347 | 13,647,770 | 923,115 | 33,569,246 | ||
Balance (in Shares) at Dec. 31, 2020 | 30,054,712 | (9,610,000) | |||||||
Issuance of ordinary share through initial public offering, net | $ 30 | 2,999,970 | (1,000,000) | $ 2,000,000 | |||||
Issuance of ordinary share through initial public offering, net (in Shares) | 600,000 | ||||||||
Cashless exercise of warrants (in Shares) | |||||||||
Net income | 11,444,273 | $ 11,444,273 | |||||||
Foreign currency translation | 174,841 | 174,841 | |||||||
Balance at Dec. 31, 2021 | $ 1,533 | $ (481) | 21,884,962 | (1,000,000) | 112,347 | 25,092,043 | 1,097,956 | 47,188,360 | |
Balance (in Shares) at Dec. 31, 2021 | 30,654,712 | (9,610,000) | |||||||
Share subscription received | 1,000,000 | 1,000,000 | |||||||
Issuance of ordinary shares for consulting fees | $ 9 | 464,805 | 464,814 | ||||||
Issuance of ordinary shares for consulting fees (in Shares) | 182,280 | ||||||||
Statutory reserve | 12,410 | (12,410) | |||||||
Cashless exercise of warrants (in Shares) | |||||||||
Net income | 3,235,686 | $ 3,235,686 | |||||||
Foreign currency translation | (2,273,012) | (2,273,012) | |||||||
Balance at Dec. 31, 2022 | $ 1,542 | $ (481) | $ 22,349,767 | $ 124,757 | $ 28,315,319 | $ (1,175,056) | $ 49,615,848 | ||
Balance (in Shares) at Dec. 31, 2022 | 30,836,992 | (9,610,000) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 3,235,686 | $ 11,444,273 | $ 2,048,107 |
Adjustments to reconcile net income to net cash (used in) provided by Operating activities: | |||
Depreciation and amortization | 654,709 | 399,223 | 308,274 |
Gain from short-term investment | (156,066) | (169,065) | (93,007) |
Loss from disposal of equipment | 437 | ||
Provision for doubtful accounts | 44,602 | 108,502 | 117,432 |
Non-cash lease expense | 22,890 | 23,075 | |
Impairment loss on intangible assets | 25,590 | ||
Common stock issue for services | 464,814 | ||
Change in operating assets and liabilities: | |||
(Increase) decrease in accounts receivable | (200) | 251,997 | 779,503 |
(Increase) in accounts receivable - related parties | (22,679) | (7,998) | |
(Increase) in other receivables and prepaid expenses | (3,181,230) | (874,228) | (778,684) |
Decrease (Increase) in other receivables - related parties | (2,662,141) | 1,840,109 | (1,436,464) |
Increase (Decrease) in accounts payable | 1,515,337 | (3,246,292) | 4,392,974 |
(Decrease) increase in accounts payable - related parties | 28,167 | (1,241,722) | 952,820 |
(Decrease) increase in deferred revenue | (196,548) | 443,540 | 51,738 |
(Decrease) increase in other payables and accrued liabilities | (919,371) | 192,497 | 288,331 |
(Decrease) in rent payable - related party | (7,294) | (54,273) | |
(Decrease) increase in taxes payable | (14,427) | (157,320) | 33,662 |
(Decrease) in lease liability | (24,928) | ||
Net cash provided by (used in) operating activities | (1,211,385) | 9,024,887 | 6,610,850 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of short-term investments | (22,152,510) | (44,921,336) | (24,422,988) |
Proceed from sale of short-term investments | 23,965,569 | 42,453,852 | 25,285,807 |
Purchase of cost method investments | (446,024) | ||
Purchase of certificate of deposit | (3,136,910) | ||
Purchase of property, plant and equipment | (708,951) | (9,598,351) | (9,388) |
Purchase of intangible assets | (49,613) | (785,590) | (9,642) |
Refund (payment) of real estate purchase | 13,178,917 | (12,613,083) | |
Net cash provided by (used in) investing activities | 608,471 | (2,809,418) | (11,769,294) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from share subscription | 1,000,000 | 2,000,000 | 18,090,668 |
Net cash provided by financing activities | 1,000,000 | 2,000,000 | 18,090,668 |
EFFECT OF EXCHANGE RATE ON CASH AND EQUIVALENTS | (809,912) | (126,514) | 322,580 |
(DECREASE) INCREASE IN CASH AND EQUIVALENTS | (412,826) | 8,088,955 | 13,254,804 |
CASH AND EQUIVALENTS, beginning of year | 29,398,047 | 21,309,092 | 8,054,288 |
CASH AND EQUIVALENTS, end of year | 28,985,221 | 29,398,047 | 21,309,092 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||
Cash paid for income tax | |||
Cash paid for interest | |||
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | |||
Proceeds from initial public offerings deposited with escrow | 600,000 | ||
Initial recognition of right-of-use assets and lease liabilities | 45,659 | 34,608 | |
Cash and cash equivalents | 17,188,833 | 29,398,047 | 21,309,092 |
Restricted cash | 11,796,388 | ||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ 28,985,221 | $ 29,398,047 | $ 21,309,092 |
Nature of Business and Organiza
Nature of Business and Organization | 12 Months Ended |
Dec. 31, 2022 | |
Nature of Business and Organization [Abstract] | |
Nature of Business and Organization | Note 1 – Nature of business and organization Oriental Culture Holding Ltd. (“Oriental Culture”) is a holding company incorporated on November 29, 2018, under the laws of the Cayman Islands. Oriental Culture Holding Ltd., its subsidiaries and variable interest entity (“VIE”) and its subsidiaries are hereafter referred to as the “Company”. Oriental Culture has no substantial operations other than holding all of the outstanding share capital of Oriental Culture Development (“Oriental Culture BVI”), China International Assets and Equity of Artworks Exchange Limited (“International Culture”) and HKDAEx Limited. Oriental Culture BVI is also a holding company holding all of the outstanding share capital of HK Oriental Culture Investment Development Limited (“Oriental Culture HK”). Oriental Culture HK is also a holding company holding all of the outstanding equity of Nanjing Rongke Business Consulting Service Co., Ltd. (“Oriental Culture WFOE” or “WFOE”). The Company, through its direct subsidiary Oriental Culture HK and VIE, Jiangsu Yanggu Culture Development Co., Ltd. and subsidiaries (“Jiangsu Yanggu”) and International Culture are engaged in providing online platforms that facilitate the e-commerce trading of artwork and collectables and the online trading of commodities, principally teas. The Company’s headquarters were located in the City of Nanjing, in the People’s Republic of China (the “PRC” or “China”). All of the Company’s business activities are carried out by Oriental Culture HK, Jiangsu Yanggu and Jiangsu Yanggu’s subsidiaries. On May 8, 2019, Oriental Culture completed its reorganization of entities under common control of various shareholders, who collectively owned 100% of the equity interests of Oriental Culture prior to the reorganization. Oriental Culture, Oriental Culture BVI, and Oriental Culture HK, were established as the holding companies of Oriental Culture WFOE. Oriental Culture WFOE is the primary beneficiary of Jiangsu Yanggu and its subsidiaries. Prior to the reorganization, Jiangsu Yanggu and International Culture were under common control, as the same group of shareholders held more than 50% of the voting ownership interest of each entity, and contemporaneous written evidence of agreements to vote a majority of the entities’ shares in concert exists. Oriental Culture, International Culture and Jiangsu Yanggu were under common control, which resulted in the consolidation of International Culture and Jiangsu Yanggu, which was accounted for as a reorganization of entities under common control at their carrying values. The financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of Oriental Culture. On May 9, 2019, the Company acquired all outstanding equity interest of HKDAEx Limited (“HKDAEx”), which provides the Company’s customers with an additional online trading platform in Hong Kong. Therefore, starting in second half of 2019, the Company expanded its business operations to include online trading of certain commodities, primarily teas on the platform of HKDAEx. Contractual Arrangements In the PRC, investment activities by foreign investors are principally governed by the Special Administrative Measures (Negative List) for Foreign Investment Access which is updated from time to time by MOFCOM and NDRC. In June, 2020, the MOFCOM and the NDRC promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access (2020 Version), or the Negative List, which became effective on July 23, 2020. On December 27, 2020, the Special Administrative Measures for foreign investment access (Negative List) (2021 version) was issued and became effective on January 1, 2022, replacing the Special Administrative Measures for foreign investment access (Negative List) (2020 version). The Negative List divides industries into two categories: restricted and prohibited. Industries not listed in the Negative List are generally open to foreign investment unless specifically restricted by other PRC regulations. Oriental Culture is a Cayman Islands company and its subsidiaries including Oriental Culture WFOE is considered a foreign invested enterprise. Although the business the Company conducts through Jiangsu Yanggu is not within the category in which foreign investment is currently restricted or prohibited under the Negative List or other PRC Laws, the Company expects that in the future Jiangsu Yanggu will engage in marketing survey services for online marketplaces. Marketing survey services are within the category in which foreign investment is restricted pursuant to the Negative List. In addition, the Company intends to centralize the Company’s management and operations in the PRC to avoid being restricted to conduct certain business activities which are important for the Company’s current or future business but are currently restricted or might be restricted in the future. As such, Jiangsu Yanggu is controlled through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries. Such contractual arrangements are comprised of a series of four agreements (collectively the “Contractual Arrangements”), of which the significant terms are as follows: Contractual Agreements with Jiangsu Yanggu Technical Consultation and Services Agreement Pursuant to the technical consultation and services agreement between Oriental Culture WFOE and Jiangsu Yanggu, Oriental Culture WFOE has the exclusive right to provide consultation and services to Jiangsu Yanggu in the areas of management, human resources, technology and intellectual property rights. For such services, Jiangsu Yanggu agrees to pay service fees of 100% of its net income to Oriental Culture WFOE and also Oriental Culture WFOE has the obligation to absorb 100% of the losses of Jiangsu Yanggu. The WFOE exclusively owns any intellectual property rights arising from the performance of this Technical Consultation and Services Agreement. The term of the Technical Consultation and Service Agreement is 20 years until May 7, 2039. Oriental Culture WFOE may terminate this agreement at any time by giving 30 days’ written notice to Jiangsu Yanggu. Equity Pledge Agreement Pursuant to the Equity Pledge Agreements among Oriental Culture WFOE, Jiangsu Yanggu and Jiangsu Yanggu’s shareholders dated May 8, 2019, each of Jiangsu Yanggu’s shareholders pledged all of their equity interests in Jiangsu Yanggu to Oriental Culture WFOE to guarantee Jiangsu Yanggu’s performance of relevant obligations and indebtedness under the Technical Consultation and Services Agreement and other agreements. If Jiangsu Yanggu breaches its obligations under the Contractual Agreements, Oriental Culture WFOE, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests in order to recover the damages associated with such breach. The pledge is valid until all of Jiangsu Yanggu’s shareholders are no longer shareholders of Jiangsu Yanggu, or until the satisfaction of all Jiangsu Yanggu’s obligations under the Contractual Agreements. Equity Option Agreement Pursuant to the Equity Option Agreement among Oriental Culture WFOE, Jiangsu Yanggu and Jiangsu Yanggu’s shareholders dated May 8, 2019, Oriental Culture WFOE has the exclusive right to require Jiangsu Yanggu’s shareholders to fulfill and complete all approval and registration procedures required under PRC laws for Oriental Culture WFOE to purchase, or designate one or more persons to purchase, each shareholders’ equity interests in Jiangsu Yanggu, in one or multiple transactions, at any time or from time to time, at Oriental Culture WFOE’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreement shall remain effective until all the equity interests owned by Jiangsu Yanggu’s shareholders have been legally transferred to Oriental Culture WFOE or its designee(s). Voting Rights Proxy and Financial Supporting Agreements Pursuant to the voting rights proxy and financial supporting agreements, as amended, among the shareholders of Jiangsu Yanggu and Oriental Culture WFOE, Jiangsu Yanggu’s shareholders have given Oriental Culture WFOE an irrevocable proxy to act on their behalf on all matters pertaining to Jiangsu Yanggu and to exercise all of their rights as shareholders of Jiangsu Yanggu, including the right to attend shareholders meeting, to exercise voting rights and to transfer all or a part of their equity interests in Jiangsu Yanggu. In consideration of such granted rights, Oriental Culture WFOE agrees to provide the necessary financial support to Jiangsu Yanggu whether or not Jiangsu Yanggu incurs losses, and agrees not to request repayment if Jiangsu Yanggu is unable to do so. The agreements is in effect for 20 years until May 7, 2039. Based on the foregoing contractual arrangements, which grant Oriental Culture WFOE effective control of Jiangsu Yanggu and its subsidiaries and obligates Oriental Culture WFOE to absorb 100% of the risk of loss from its activities, as well as enable Oriental Culture WFOE to receive 100% of the expected residual returns, the Company accounts for Jiangsu Yanggu and its subsidiaries as VIEs. Accordingly, the Company consolidates the accounts of Jiangsu Yanggu and its subsidiaries in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission (“SEC”), and the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 810-10, Consolidation. On January 28, 2021, Oriental Culture WFOE entered into an Amended and Restated Equity Pledge Agreement, an Amended and Restated Equity Option Agreement, and an Amended and Restated Voting Rights Proxy and Financial Supporting Agreement (“Amended and Restated VIE Agreements”) with Jiangsu Yanggu and all shareholders of Jiangsu Yanggu in order to amend and restate the Equity Pledge Agreement, Equity Option Agreement, and Voting Rights Proxy and Financial Supporting Agreement originally entered by the parties in May, 2019 (“Original VIE Agreements”). The Amended and Restated VIE Agreements were made principally to reflect a change of the share ownership of Jiangsu Yanggu as a result of the transfer by Mr. Weipeng Liang of his 10% equity interest in Jiangsu Yanggu to Ms. Yuanyuan Xiao on January 28, 2021. Except for the change of the share ownership of Jiangsu Yanggu due to such equity transfer, there are no other changes to the terms of the Original VIE Agreements. The accompanying consolidated financial statements reflect the activities of the Company and each of the following entities: Name Background Ownership China International Assets and Equity of Artworks Exchange Limited (“International Culture”) ● A Hong Kong company ● Incorporated on November 22, 2013, commenced operations in March 2018. ● Engages in providing an online platform that facilitates e-commerce of collectible and artwork trading 100% HKDAEx Limited (“HKDAEx”) ● A Hong Kong company ● Incorporated on April 18, 2018 ● Engages in providing an online platform that facilitates e-commerce of certain commodities trading 100% Oriental Culture BVI ● A British Virgin Islands company ● Incorporated on December 6, 2018 100% Oriental Culture HK ● A Hong Kong company ● Incorporated on January 3, 2019 100% owned by Oriental Culture BVI Oriental Culture WFOE ● A PRC limited liability company and deemed a wholly foreign owned enterprise (“WFOE”) ● Incorporated on May 7, 2019 100% owned by Oriental Culture HK Jiangsu Yanggu ● A PRC limited liability company ● Incorporated on August 23, 2017, commenced operations in March 2018. ● Holding company of Nanjing Yanyu and Nanjing Yanqing VIE of Oriental Culture WFOE Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing Yanyu”) ● A PRC limited liability company ● Incorporated on June 7, 2018 ● Provides support services to Jiangsu Yanggu, International Culture, HKDAEx, Kashi Longrui and Kashi Dongfang 100% owned by Jiangsu Yanggu Nanjing Yanqing Information Technology Co., Ltd. (“Nanjing Yanqing”) ● A PRC limited liability company ● Incorporated on May 17, 2018 ● Holding company of Kashi Longrui and Kashi Dongfang 100% owned by Jiangsu Yanggu Kashi Longrui Business Management Service Co., Ltd. (“Kashi Longrui”) ● A PRC limited liability company ● Incorporated on July 19, 2018 ● Operating entity provides marketing services 100% owned by Nanjing Yanqing Kashi Dongfang Cangpin Culture Development Co., Ltd. (“Kashi Dongfang”) ● A PRC limited liability company ● Incorporated on August 29, 2018 ● Operating entity provides listing and warehouse services 100% owned by Nanjing Yanqing |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Note 2 – Summary of significant accounting policies Basis of presentation The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and information pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). Principles of consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries, and their VIEs. All intercompany transactions and balances are eliminated in consolidation. Recapitalization On November 8, 2019, the Company effected a 2 for 1 forward share split of all issued and outstanding ordinary shares of the Company. In addition, all existing shareholders agreed to surrender to the Company as treasury shares, 12.5% of the then outstanding ordinary shares (3,100,000 ordinary shares) for no consideration. On May 28, 2020, all existing shareholders of the Company agreed to surrender 6,510,000 ordinary shares, or 30% of our then outstanding ordinary shares, at no consideration to be reserved as treasury shares of the Company. These transactions were treated as a recapitalization prior to the Company’s initial public offering. All share and per share amounts were retroactively adjusted for this recapitalization for all periods presented. Use of estimates and assumptions 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 and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include revenue recognition, allowance for doubtful accounts, the useful lives of property and equipment and intangible assets and impairment of long-lived assets. Actual results could differ from these estimates. Foreign currency translation and transactions The reporting currency of the Company is the U.S. dollar. The functional currency for our holding company is the U.S. dollar. In the PRC, the Company conducts its businesses in the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. In Hong Kong, the Company conducts its business in the local currency, Hong Kong dollar (HKD), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the Federal Reserve at the end of the period. The statements of income and cash flows are translated at the average translation rates during the reporting periods and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss). Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Translation adjustments are included in accumulated other comprehensive income. The balance sheet amounts, with the exception of shareholder’s equity at December 31, 2022 and December 31, 2021 were translated at RMB 6.96 and RMB 6.38 to one U.S. dollar (USD), respectively. The average translation rates applied to the consolidated statements of income and cash flows for years ended December 31, 2022, 2021 and 2020 were RMB 6.73, RMB 6.45 and RMB 6.90 to one USD. The balance sheet amounts, with the exception of shareholder’s equity at December 31, 2022 and 2021 were translated at HKD 7.80 and HKD 7.80 to one USD, respectively. The average translation rates applied to the consolidated statements of income and cash flows for years ended December 31, 2022, 2021 and 2020 were HKD 7.83, HKD 7.77 and HKD 7.76 to one USD, respectively. The shareholder’s equity accounts were translated at their historical rates. Amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Fair value measurement The accounting standards regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company. The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurements and enhance disclosure requirements for fair value measures. The three levels are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices, other than those included in Level 1, for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. The carrying amounts included in current assets and current liabilities in the consolidated balance sheets approximate their fair values because of the short-term nature of such instruments. Fair value disclosure: December 31, 2022 Cost Level 1 Level 2 Level 3 Short-term investment (Restricted) $ 4,703,323 $ - $ 4,703,323 $ - December 31, 2021 Cost Level 1 Level 2 Level 3 Short-term investment $ 3,748,900 $ - $ 3,748,900 $ - The Company values its short-term investment using alternative pricing sources and market observable inputs, and accordingly the Company classifies the valuation techniques that use these inputs as Level 2. This investment has original maturities of less than 1 year and the carrying value approximates its fair value. Cash and equivalents Cash and equivalents consist of cash in bank and money market funds which are unrestricted as to immediate withdrawal and use. Restricted cash On July 1, 2022, Mr. Huajun Gao and Mr. Aiming Kong, each an 11.5% shareholder of Oriental Culture Holding LTD (the “Company”), were detained by Nan County Public Safety Bureau of Yiyang City, Hunan Province, China. On July 26, 2022, Nan County People’s Procuratorate approved the arrest of Mr. Gao and Mr. Kong with a charge of illegal business operation of Nanjing Jinwang Art Purchase E-commerce Co., Ltd., a company controlled by Mr. Gao and Mr. Kong (“Nanjing Jinwang”). On July 1, 2022, Nan County Public Safety Bureau froze certain bank accounts of Kashi Longrui Business Management Services Co., Ltd. (“Kashi Longrui”), Kashi Dongfang Cangpin Culture Development Co., Ltd. (“Kashi Dongfang”) and Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing Yanyu”), all subsidiaries of Jiangsu Yanggu Culture Development Co., Ltd., the variable interest entity of the Company in China (the “VIE”) because they, each had business relationship with Nanjing Jinwang. The total restricted cash was $11,796,388 as of December 31, 2022. Short-term investments The short-term investment is an investment in a bank-issued wealth management product with underlying investments in cash, bonds and equity funds. The investment products are issued by Ping An Bank. The investments have a maturity of less than 1 year and their carrying value approximates their fair value. The gain from sale of these investments is recognized in the statements of income and comprehensive income. Earnings from these investments for the years ended December 31, 2022, 2021 and 2020 was $156,066, $169,065 and $93,007, respectively. Due to the issue mentioned in Restricted cash, all short-term investments were $4,703,323 as of December 31, 2022 was restricted. Accounts receivable, net (including related parties) Accounts receivable is amounts due from the Company’s customers. An allowance for doubtful accounts may be established and recorded based on management’s assessment of potential losses based on the credit history and relationships with the customers. Management reviews its receivables on a regular basis to determine if the allowance for doubtful accounts is adequate and adjusts the allowance when necessary. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Other receivables and prepaid expenses Other receivables that are short term include employee advances, such as travel advance, advance to purchase office supplies in the normal course of business and certain short-term deposits. An allowance for doubtful accounts may be established and recorded based on management’s assessment of the likelihood of realization or collection. Management reviews these items on a regular basis to determine if the allowance for doubtful accounts is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of realization or collection is not probable. No allowance was required as of December 31, 2022 or 2021. Prepaid expenses include advance payments made to vendors for certain prepaid services such as system service fees, prepaid rent for our office (with lease under one year) and prepaid taxes. Other receivables – related party Other receivables – related party consist of funds which are held on a trading platform trust account with Nanjing Jinwang Art Purchase E-commerce Co., Ltd., which is owned by Huajun Gao and Aimin Kong, each is an 11.5% beneficial owners of the Company. The funds are not restricted and can be withdrawn and used after the Company completes the necessary administrative procedures. The Company normally makes withdrawals from this account monthly. The outstanding balance was paid back to the Company in April 2023. Escrow In connection with the Company’s initial public offering in December 2020, $600,000 of the net proceeds was deposited into an escrow account as security for the underwriters for 24 months from the closing of the offering to cover any potential claims related to the offering. The full amount of $600,000 was released to the Company in January 2023. Deposit The Company entered into a memorandum of understanding (“MOU”) to acquire office buildings and the related land use rights in November 2020 with a third-party seller. The close of the transaction was dependent on the seller obtaining a permit regarding the proposed use of the site. Subsequent to December 31, 2020, the Company terminated the MOU as the seller was unable to obtain the required permit and the Company received a full refund of the deposit (see Note 5). Property and equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets with no residual value. The estimated useful lives are as follows: Useful Life Office equipment and furnishings 1 - 5 years Electronic equipment 2 - 5 years Server room equipment 5 years Vehicles 5 years Office building 35 years Leasehold improvements lesser of lease term or expected useful life The cost and related accumulated depreciation and amortization of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of income and other comprehensive income. Expenditures for maintenance and repairs are expensed as incurred, while additions, renewals and betterments, which are expected to extend the useful life of an asset, are capitalized. The Company also re-evaluates the periods of depreciation and amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. Construction-in-progress represents material, contractor and labor costs, design fees and inspection fees in connection with the construction of the Company’s office building in Jiangsu, China. See Note 7 for details. Intangible assets, net Intangible assets, net, are stated at cost, less accumulated amortization. Amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets as follows: Classification Estimated Artwork and collectible trading platform 5 years Software 5 years Impairment for long-lived assets Long-lived assets, including property and equipment with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the asset based on the undiscounted future cash flows the asset is expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. For the years ended December 31, 2022,2021 and 2020, the Company recorded nil nil Investments Entities in which the Company has the ability to exercise significant influence, but does not have a controlling interest, are accounted for using the equity method. Significant influence is generally considered to exist when the Company has voting shares of 20% to 50%, and other factors, such as representation on the board of directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under this method of accounting, the Company records its proportionate share of the net earnings or losses of equity method investees and a corresponding increase or decrease to the investment balances. Dividends received from the equity method investments are recorded as reductions in the cost of such investments. The Company generally considers an ownership interest of 20% or higher to represent significant influence. The Company accounts for the investments in entities over which it has neither control nor significant influence, and no readily determinable fair value is available, using the investment cost minus any impairment, if necessary. The Company’s investment of 18% ownership of Zhongcang Warehouse Co., Ltd. was $501,802 and $548,151 as of December 31, 2022 and 2021, respectively, and is accounted for using the cost method. In March 2022, the Company’s VIE Jiangsu Yanggu entered into an equity subscription agreement to purchase 11.875% equity interest of Beijing Jiu Yu Ling Jing Technology Co., Ltd. (“JYLJ”), a company incorporated in the PRC, which primarily engages in wine and alcohol product merchants and customers, as well as product launch, brand showcase, marketing and promotion and it is currently in the process of developing a “Wine and Spirits” metaverse, and the amount raised through increase of share capital will be mainly used for this development. JYLJ’s total registered capital is RMB 60 million (approximately USD 9.2 million). Jiangsu Yanggu’s subscription amount is RMB 6 million and RMB 3 million was paid in March 2022. The remaining RMB 3 million is to be paid upon further resolution from the board of JYLJ. As of December 31, 2022, the Company’s investment in YLJ was $430,750, and is accounted for using the cost method. Investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investment is less than its carrying value. An impairment loss is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investment; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated in fair value. No events have occurred that indicated a decline in fair value that is other-than-temporary for the years ended December 31, 2022 and 2021. Certificate of deposits The Company has a certificate of deposit with a bank which expires on May 20, 2023 with interest of 3.575%. The Company is subject to an early withdrawal penalty if redeemed before maturity. Interest income was approximately $106,302, $58,000 and nil Deferred revenue Payments received from customers before all the relevant criteria for revenue recognition are recorded as deferred revenue. December 31, December 31, Beginning balance $ 697,863 $ 243,355 Customer advances 16,803,450 36,991,645 Recognized as revenues (16,993,268 ) (36,542,832 ) Effect of exchange rates (59,008 ) 5,695 Ending balance $ 449,037 $ 697,863 Revenue recognition The Company follows FASB ASC 606, Revenue from Contracts with Customers, for recognizing its revenue. The core principle underlying the revenue recognition standard is that the Company will recognize revenue to represent the transfer of services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company to identify contractual performance obligations and determine whether revenue should be recognized when control of services transfers to a customer. Under the guidance of ASC 606, the Company is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract and (e) recognize revenue when (or as) the Company satisfies its performance obligation. Revenues are recorded, net of sales related taxes and surcharges. The Company continues to derive its revenues from service contracts with its customers with revenues being recognized upon performance of services. Persuasive evidence of an arrangement is demonstrated via service contracts and invoices; and the consideration to the customer is fixed upon acceptance of the sales contract. At times, the Company offers incentives and rebates to its customers directly and the Company accounts for these incentives payable to customers as a reduction of the contract price. The Company’s revenues are recognized when all performance obligations are satisfied. The Company’s commission expenses to its sales agents are expensed when incurred. The Company is an online provider of collectibles and artwork e-commerce services, which allows artists and art dealers and owners to access the art trading market with a wider range of artwork investors through the Company’s platforms. The Company currently facilitates trading by individual and institutional customers of artwork, collectibles and commodities on the Company’s online platforms. In addition to collectibles and artwork, the Company has also expanded its platform to trade commodities principally teas. The Company generates revenue from its services in connection with the trading of artwork and commodities on its platforms, primarily consisting of listing service fees, transaction fees, marketing services fees and other revenues collected from traders (the Company’s customers). The Company has cooperative agreements with third parties who are experts and possess new ideas and resources for collectibles/commodities business to co-develop certain niche markets (such as vintage coins and teas) to be traded on the Company’s online platforms. These parties are required to place a security deposits with the Company until termination of the cooperative agreements and deposit amounts will need to increase as the trading volume increases. Revenue generated from these niche markets will be shared between the Company and these parties based on pre-agreed rates and trading volume. The Company accounts for the portion of revenue that needs to be reimbursed to the third parties as a reduction of total contract revenue to be received from customers. Approximately nil Listing service fees One-time nonrefundable listing service fees are collected from owners and traders for listing their products on the platform. The Company’s only performance obligation is to provide the listing on the Company’s platform over the period requested. The Company recognizes the related revenue upon the completion of its performance obligations. The fees are determined by contracts with the customers as a fixed percentage of the listing price. Transaction fee revenue Transaction fee revenue is generally calculated based on the transaction value of collectibles, artwork and commodities per transaction. Transaction value is the dollar amount of the purchase or sale of the collectibles, artwork and commodities after they are listed on the Company’s platforms. The Company’s performance obligation is to facilitate the trading transactions. Transaction fee revenue is recognized and collected at the point-in-time when the transaction is completed. Transaction fee revenue also includes predetermined monthly transaction fees for select traders with large transactions and are negotiated on a case-by-case basis. Predetermined transaction fees are recognized and earned over the specified service period. In 2018, the Company started a customer reward points program, pursuant to which reward points were issued for opening a new account or referring customers to open accounts with us during our promotion period. In that regard, customers are required to redeem certain reward points for new listings along with the regular listing services fees. If a customer does not have any reward points, he/she can purchase them from other customers on our platform. The Company does not record revenue when customers redeem any points as it is considered as a prerequisite for a new listing in addition to the regular services fees. The points are traded by and among our customers on the platform and the Company charges a transaction fee from such points trading. The Company assessed if a material right existed when the Company initially issued the reward points and if the points represent a separate performance obligation. In general, the points were given to customers based on existing accounts or promotions without the customers having to acquire services from the Company, therefore there was no material right and no separate performance obligation exists. There is no liability for unredeemed awards. Transaction fee revenue from the trading of reward points amounted to approximately $1.1 million, $3.4 million and $2.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Predetermined transaction fees received in advance of the specified service period are recorded as deferred revenue. Marketing service fees Marketing service fees are usually collected after the Company completes its services and includes the following type of services: (1) For certain marketing service agreements, the Company promises to assist its customer in connection with his/her listing and trading of his/her collectible/artwork or commodities on the Company’s platforms, which mainly includes consultation and supporting services of the marketability for the collectible/artwork; assessing its market value and market acceptance for the collectible/artwork or commodities; and assisting in the application and legal protection required for the customer’s collectible/artwork or commodities to be approved for listing on the Company’s platforms. For marketing service contracts in which the related performance obligations can be completed within a short period of time, the Company recognizes the related revenue upon the completion of its performance obligations. (2) Marketing service agreements also includes providing promotional services for customers’ items as where to place ads on well-known cultural and art exchange websites in China, to provide online and offline marketing services including cooperation with auction houses and participate in industry-related exhibitions and fairs. The marketing service fees are charged based on the type of listing session that the customer applies for and whether the customer has listed and sold collectibles on other platforms before, and they are not tied to the type or value of the underlying collectible/artwork. Marketing service contracts and fees are recognized upon the completion of the performance obligation. Other revenues Other revenues (including related parties of $166,325, $233,157 and $213,172 for the years ended December 31, 2022, 2021 and 2020, respectively) primarily includes service fees for IT technical support to customers and other revenues from agency recommendation fees. IT technical support fees are negotiated on a case by case basis and are recognized when the related services have been performed based on the specific terms of the contract. Agency recommendation fees are mainly training and consulting services provided to certain traders/agents for them to be qualified. Upon completion of the training and consultation, these qualified traders/agents may introduce the Company’s platform and services to potential customers to list their collectibles and artwork with the Company for a fee or promote their own products on the Company’s platforms. The Company’s performance obligation is completed and revenue is recognized upon completion of training and consultation services. The Company disaggregated its revenue into the following four categories: Years Ended 2022 2021 2020 Listing service fees $ 1,244,251 $ 6,900,561 8,405,211 Transaction fees 13,643,958 24,462,861 7,075,283 Marketing service fees 2,749,224 5,750,901 1,370,164 Other revenues* 175,706 482,137 588,144 Total $ 17,813,139 $ 37,596,460 $ 17,438,802 * Including $166,325, $233,157 and $213,172 for the years ended December 31, 2022, 2021 and 2020, respectively, from related parties. Cost of revenues Cost of revenues consist of compensation including social welfare and benefits for the Company’s IT, risk management and customer services team, appraisal fees, online cloud service fees, storage fees paid to related party, and depreciation and amortization of hardware and software for the Company’s trading platforms. Selling and marketing expenses: Selling and marketing expenses includes salary and benefits for our employees in the sales and marketing department and marketing and advertising expenses. Selling expenses also include incentive payments to third parties that refer new traders to utilize the Company’s e-commerce trading platforms. Website advertising expenses which are included in selling and marketing expenses to related party were $43,590, $359,968 and $1,762,652 for the years ended December 31, 2022, 2021 and 2020, respectively. Value added taxes (“VAT”) Revenue is the invoiced value of services, net of VAT. The VAT is based on the gross sales price and VAT rates range up to 6%, depending on the type of services provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. The net VAT balance between input VAT and output VAT is recorded in taxes payable or other receivables and prepaid expenses. All VAT returns filed by the Company’s subsidy, VIE and its subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing. Income taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes.” Under the asset and liability method as required by this accounting standard, deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax. Deferred tax liabilities are recognized for all future taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable income will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred taxes are charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Net deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that has a greater than 50% likelihood of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income taxes are classified as income tax expense in the period incurred. PRC tax returns filed in 2021 are subject to examination by the applicable tax authorities. Tax returns filed in Hong Kong from 2018 to 2021 are subject to examination. Leases The Company adopted FASB ASU 2016-02, “Leases” (Topic 842) for the year ended December 31, 2021, and elected the practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Upon adoption, the Company recognized $34,608 of a right of use (“ROU”) assets and same amount of lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 4.75% based on the duration of lease terms. Operating lease ROU assets and lease liabilities are recognized at the adoption date or the commencement date, whichever is earlier, based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company used its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term. Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabi |
Variable Interest Entity
Variable Interest Entity | 12 Months Ended |
Dec. 31, 2022 | |
Variable Interest Entity [Abstract] | |
Variable interest entity | Note 3 – Variable interest entity On May 8, 2019, Oriental Culture WFOE entered into Contractual Arrangements with Jiangsu Yanggu and its shareholders. The significant terms of these Contractual Arrangements are summarized in “Note 1 - Nature of business and organization” above. As a result, the Company classifies Jiangsu Yanggu and its subsidiaries as VIEs. Please also see Note 14 –Commitments and Contingencies for uncertainties of VIE. A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. Oriental Culture WFOE is deemed to have a controlling financial interest and is the primary beneficiary of Jiangsu Yanggu and its subsidiaries because it has both of the following characteristics: (1) The power to direct activities at Jiangsu Yanggu that most significantly impact such entity’s economic performance; and (2) The obligation to absorb losses of, and the right to receive benefits from Jiangsu Yanggu that could potentially be significant to such entity. Accordingly, the accounts of Jiangsu Yanggu and its subsidiaries are consolidated in the accompanying financial statements pursuant to ASC 810-10, Consolidation. On January 28, 2021, Oriental Culture WFOE entered into an Amended and Restated Equity Pledge Agreement, an Amended and Restated Equity Option Agreement, and an Amended and Restated Voting Rights Proxy and Financial Supporting Agreement (“Amended and Restated VIE Agreements”) with Jiangsu Yanggu and all shareholders of Jiangsu Yanggu in order to amend and restate the Equity Pledge Agreement, Equity Option Agreement, and Voting Rights Proxy and Financial Supporting Agreement originally entered by the parties in May, 2019 (“Original VIE Agreements”). The Amended and Restated VIE Agreements were made principally to reflect a change of the share ownership of Jiangsu Yanggu as a result of the transfer by Mr. Weipeng Liang of his 10% equity interest in Jiangsu Yanggu to Ms. Yuanyuan Xiao on January 28, 2021. Except for the change of the share ownership of Jiangsu Yanggu due to such equity transfer, there are no other changes to the terms of the Original VIE Agreements. The carrying amounts of the VIEs’ consolidated assets and liabilities are as follows: December 31, December 31, Current asset: $ 34,200,319 $ 26,650,671 Property and equipment, net 9,417,777 9,890,566 Other noncurrent assets 1,049,683 3,801,822 Total assets 44,667,779 40,343,059 Total liabilities (4,047,943 ) (3,687,973 ) Total net assets $ 40,619,836 $ 36,655,086 December 31, December 31, Current liabilities: Accounts payable $ 2,889,312 $ 1,483,827 Accounts payable – related parties 28,727 1,665 Deferred revenue 449,037 697,863 Other payables and accrued liabilities 667,495 1,474,792 Taxes payable 13,372 29,826 Total liabilities $ 4,047,943 $ 3,687,973 The summarized operating results of the VIEs are as follows: Years Ended 2022 2021 2020 Operating revenues $ 17,813,254 $ 37,596,460 $ 17,438,918 Income from operations $ 6,728,516 $ 15,203,703 $ 6,793,583 Net income $ 7,314,651 $ 15,762,806 $ 6,948,599 |
Accounts Receivables, Net
Accounts Receivables, Net | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivables, Net [Abstract] | |
Accounts receivables, net | Note 4 – Accounts receivables, net The Company’s net accounts receivable are as follows: December 31, December 31, 2022 2021 Trade accounts receivable $ 43,282 $ 156,852 Less: allowance for doubtful accounts (43,075 ) (109,792 ) Accounts receivable, net $ 207 $ 47,060 |
Other Receivables and Prepaid E
Other Receivables and Prepaid Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Other Receivables and Prepaid Expenses [Abstract] | |
Other receivables and prepaid expenses | Note 5 – Other receivables and prepaid expenses Other receivables consist of the following: December 31, December 31, Rent and other deposits $ 16,296 $ 14,716 Advance to third parties* 2,799,874 - Employee advances and others 915,242 8,095 Prepaid VAT taxes 63,682 226,206 Prepaid consulting fee 646,852 1,136,377 Total other receivables and prepaid expenses $ 4,441,946 $ 1,385,394 * This advance was short term, non-interest bearing and due on demand. The Company collected full amount of advance by March 22, 2023. |
Deposit
Deposit | 12 Months Ended |
Dec. 31, 2022 | |
Deposit [Abstract] | |
Deposit | Note 6 – Deposit On November 16, 2020, the Company entered into a memorandum of understanding (“MOU”) with a third-party to acquire approximately 39,000 square meters of office and warehouse space and related land use rights in Nanjing city to meet the Company’s growing need for office and warehouse space. The price per the MOU was RMB195 million (approximately $29.6 million) with land use rights to expire on October 7, 2052. The current land use rights for such office and warehouse on site were for industrial use purposes and the seller agreed to apply for approval with the local government to change the use of rights from industrial to research and development before the parties would proceed further with the MOU. The Company was planning to use the property for its research and development center. The Company paid a deposit of RMB 65.0 million (approximately $9.9 million) after signing the MOU. A second payment of RMB 22 million (approximately $3.4 million) was made upon finalization of the research center development plan with the final payment to be paid when the permit is approved in six months and the research center is completed. The Company paid the deposit of RMB 87.0 million (approximately $13.3 million) as of December 31, 2020. In March 2021, the Company was notified by the seller that the permit may not be obtained timely or at all. The Company terminated the MOU and the seller refunded RMB 87.0 million (approximately $13.2 million) in 2021. There was no termination fee or penalty. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, Net [Abstract] | |
Property and equipment, net | Note 7 – Property and equipment, net Property and equipment consist of the following: December 31, December 31, Office and electronic equipment $ 328,305 $ 355,937 Vehicle 765,250 744,581 Furniture and leasehold improvement 31,285 29,498 Office building 8,457,598 9,238,795 Construction in process 599,319 - Less: accumulated depreciation (758,044 ) (464,522 ) Total $ 9,423,713 $ 9,904,289 The Company acquired an office building in Jiangsu, China on November 17, 2021, the total building is 6,840.41 square meter with 4 floors, which will be used for the Company’s operations. Construction in progress represent ongoing construction for the office building mentioned above. The construction was to install elevator, HVAC, electrical system and office construction for the third and fourth floor of the office building to get the office space ready for use. The construction is expected to be completed in August 2023. The first and second floor was already ready to use when the Company acquired the building. As such, depreciation expenses for the building for the year ended December 31, 2022 was recorded for the first and second floor of the building which was ready for use. Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $340,296, $186,551 and $122,409, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets, net | Note 8 – Intangible assets, net Intangible assets consist of the following: December 31, December 31, Artwork trading platform $ 797,568 $ 793,310 Software 933,732 902,313 Copyright - - Less: accumulated amortization and impairment (914,415 ) (575,602 ) Total $ 816,885 $ 1,120,021 Amortization expenses for the years ended December 31, 2022, 2021 and 2020 was $333,135, $212,672 and $185,865 respectively. The future amortization is as follows: Twelve Months Ending December 31, Estimated 2023 $ 320,713 2024 196,955 2025 161,581 2026 136,099 2027 1,537 Total $ 816,885 |
Other Payables and Accrued Liab
Other Payables and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Other Payables and Accrued Liabilities [Abstract] | |
Other payables and accrued liabilities | Note 9 – Other payables and accrued liabilities Other payables and accrued liabilities consist of the following: December 31, December 31, Security deposits payable* $ 157,961 $ 172,552 Salary payable** 97,052 884,825 Others 35,137 226,858 Total $ 290,150 $ 1,284,235 * The Company signed cooperation agreements with third parties to co-develop a niche market for its online platforms. The Company provides its platforms and users to promote products provided by the third party developers. Revenue generated from the niche markets will be shared between the Company and these parties. These third- party developers also guarantee certain sales volume yearly and the security deposit will be paid to the Company to make up for the sales target shortfalls at the end of the year. Any remaining security deposits will be returned to these parties upon dissolution of the cooperation agreements. The Company returned approximately nil and recognized approximately nil of deposits for target shortfalls as revenue for the years ended December 31, 2022. The Company returned approximately $314,000 and recognized approximately $119,000 of deposits for target shortfalls as revenue for the year ended December 31, 2021. No deposit were returned and no revenue was recognized for the year ended December 31, 2020. ** During the years ended December 31, 2022, 2021 and 2020, the Company accrued bonuses payable of approximately $40,203, $789,325 and $256,000, respectively. |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Taxes | Note 10 – Taxes Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. Additionally, upon payment of dividends to the shareholders, no Cayman Islands withholding tax will be imposed. Hong Kong Under the current Hong Kong Inland Revenue Ordinance, Oriental Culture HK established in Hong Kong is subject to a 16.5% income tax on taxable income generated from operations in Hong Kong. Payments of dividends from Oriental Culture HK to us are not subject to any Hong Kong withholding tax. The Company did not generate any revenue from operations in Hong Kong since its inception through December 31, 2022, and therefore is not subject to any income taxes in Hong Kong. PRC The WFOE and VIEs incorporated in the PRC are governed by the income tax laws of the PRC and the income tax provisions in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemptions may be granted on case-by-case basis. Under the current EIT Law, dividends paid by an FIE to any of its foreign non-resident enterprise investors are subject to a 10% withholding tax. Thus, dividends, if and when payable by the Company’s PRC subsidiaries to their offshore parent entities, would be subject to a 10% withholding tax. A lower tax rate will be applied if such foreign non-resident enterprise investor’s jurisdiction of incorporation has signed a tax treaty or arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income with China. There is such a tax arrangement between the PRC and Hong Kong. Thus, the dividends, if and when payable by the Company’s WFOE to the offshore parent entity located in Hong Kong, would be subject to a 5% withholding tax rather than the statutory rate of 10% provided that the offshore entity located in Hong Kong meets the requirements stipulated by relevant PRC tax regulations. The Company has not provided for deferred income tax liabilities on the WFOE’s undistributed earnings of $42,087,930 and $34,785,070 as of December 31, 2022 and 2021, respectively, because the Company controls the timing of the undistributed earnings and it is probable that such earnings will not be distributed. The Company plans to reinvest those earnings in the PRC operations for the foreseeable future. Moreover, the current EIT Law treats enterprises established outside of China with “effective management and control” located in China as PRC resident enterprises for tax purposes. The term “effective management and control” is generally defined as exercising overall management and control over the business, personnel, accounting, properties, etc. of an enterprise. The Company, if considered a PRC resident enterprise for tax purposes, would be subject to the PRC Enterprise Income Tax at the rate of 25% on its worldwide income for the period after January 1, 2008 if the only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside in China. Based upon a review of surrounding facts and circumstances, the Company does not believe its subsidiaries outside of China is a PRC resident enterprise for PRC tax purposes because the rule only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, and therefore was not subject to PRC taxes. Kashi Longrui and Kashi Dongfang were formed and registered in Kashi in Xinjiang Province, China in 2018. These companies have received an exemption and will not be subject to income tax for 5 years, which was expired on December 31, 2022. As of December 31, 2022 and 2021, the Company has not recorded any deferred tax liabilities in light of (1) its tax free arrangement; (2) its compliance with PRC EIT Law in making payments of enterprise income tax; and (3) Jiangsu Yanggu’s inability to pay its net profits to WFOE under the VIE agreement without the Company’s determination. However, any changes with the current effective PRC Tax laws and regulations could result in the Company paying more enterprise income tax, which would materially and adversely affect the operating and financial performance of the Company. Tax savings for the years ended December 31, 2022, 2021 and 2020 amounted to approximately $1,933,000, $4,198,000 and $2,427,000, respectively. The Company’s basic and diluted earnings per share would have been lower by $0.50, $0.20 and $0.16 per share for the years ended December 31, 2022, 2021 and 2020, respectively, without the preferential tax exemption. The following table reconciles China statutory rates to the Company’s effective tax rate: December 31, December 31, China income tax rate 25.0 % 25.0 % Tax exemption/preferential rate reduction (21.1 )% (21.6 )% Change in valuation allowance (3.8 )% (3.4 )% Effective tax rate 0.1 % - Deferred tax assets - China The following table summarizes the significant components of deferred tax assets. December 31, December 31, Net operating losses $ 961,468 $ 820,610 Allowance for doubtful accounts 10,769 27,125 Less: valuation allowance (972,237 ) (847,735 ) Deferred tax assets, net $ - $ - The following table summarizes the changes in valuation allowance for deferred tax assets. December 31, December 31, Beginning balance $ 847,735 $ 452,009 Additions 124,502 395,726 Ending balance $ 972,237 $ 847,735 The Company evaluated the recoverable amounts of deferred tax assets, and provided a valuation allowance to the extent that future taxable profits will be available against which the net operating loss and temporary difference can be utilized. The Company considers both positive and negative factors when assessing the future realization of the deferred tax assets and applied weigh to the relative impact of the evidence to the extent it could be objectively verified. The Company’s NOL was mainly from the Company’s VIE and its subsidiaries’ cumulative net operating losses (“NOL”) of approximately $4,521,000 and $3,786,000 as of December 31, 2022 and 2021, and will start expiring in 2024. Management believes projected future losses outweighs other factors and made a full allowance of related deferred tax assets. Taxes payable consist of the following: December 31, December 31, VAT payable $ 6,858 $ 27,077 Other taxes payable 6,514 2,749 Total $ 13,372 $ 29,826 |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2022 | |
Concentration of Credit Risk [Abstract] | |
Concentration of credit risk | Note 11 – Concentration of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and equivalents. A depositor has up to RMB 500,000 (approximately $72,000) insured by the People’s Bank of China Financial Stability Bureau (“FSD”). As of December 31, 2022 and 2021, approximately $37,574,000 and $25,572,000 was deposited in a bank located in the PRC was not insured by FSD. As of December 31, 2022 and 2021, approximately $3,421,345 and $928,913 was deposited on our trading platform trust account located in the PRC. The account is held at Ping An Bank and entrusted with Nanjing Jinwang Art Purchase E-commerce Co., Ltd., our related party. This balance is not covered by insurance. While management believes that these financial institutions and platform fund holder are of high credit quality, it continually monitors their credit worthiness. Customer concentration risk Three customers accounted for approximately 59.3%, 22.5% and 17.9% of the Company’s accounts receivable as of December 31, 2022 and two customers accounted for approximately 28.5% and 66.6% of the Company’s accounts receivable as of December 31, 2021. December 31, December 31, Amount % Amount % Customer A $ 43,075 59.3 % $ 47,054 28.5 % Customer B $ 16,345 22.5 % $ - - Customer C $ 12,966 17.9 % $ - - Customer D $ - 0.0 % $ 109,792 66.6 % All of the Company’s revenue was generated in the PRC. Vendor concentration risk One vendor, a related party accounted for 30.5%, 30.1% and 65.7% of the Company’s purchases for the years ended December 31, 2022, 2021 and 2020, respectively. There is no accounts payable concentration for the years ended December 31, 2022 and 2021. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 12 – Related party transactions a. Accounts receivable – related parties consist of the following: Relationship Nature December 31, 2022 December 31, 2021 Nanjing Culture Exchange Art Property Exchange Co., Ltd. (“Nanjing Culture”) Mr. Huajun Gao, the general manager and director of Nanjing Culture, and Mr. Aimin Kong, the vice chairman of Nanjing Culture, each beneficially owns 11.5% shares of the Company Receivable from technological service fee revenue $ 16,345 $ 6,070 Jinling Cultural Property Exchange Co., Ltd.(“Jinling Cultural”) Its major shareholder is also a major shareholder of Jiangsu Yanggu Receivable from technological service fee revenue 12,966 2,023 Total $ 29,311 $ 8,093 b. Accounts payable – related parties consist of the following: Relationship Nature December 31, December 31, Kashi Jinwang Art Purchase E-commerce Co., Ltd. 100% owned by Nanjing Jinwang Art Purchase E-commerce Co., Ltd., a related party of the Company Payable for online advertising expenses - 1,665 Zhongcang Warehouse Co., Ltd. An 18% subsidiary of the VIE of the Company Payable for storage fees 28,727 - Total $ 28,727 $ 1,665 c. Other payables – related parties consist of the following: Other payables – related parties are those nontrade payables arising from transactions between the Company and its related parties, such as payments paid on behalf of the Company. Relationship December 31, December 31, Mun Wah Wan Chairman of the board of directors of the Company 3,262 - Total $ 3,262 $ - d. Net revenues – related parties consist of the following: Relationship Nature Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Nanjing Culture Mr. Huajun Gao, the general manager and director of Nanjing Culture, and Mr. Aimin Kong, the vice chairman of Nanjing Culture, each beneficially owns 11.5% shares of the Company Technological service fee revenue $ 29,934 $ 38,959 $ 41,571 Jinling Cultural It is owned by our 11.5% beneficial shareholder, Huajun Gao Technological service fee revenue 21,542 22,519 21,042 Hunan Huaqiang Artwork Trading Center Co., Ltd. 49% owned by Jinling Cultural Technological service fee revenue 17,091 21,821 20,390 Nanjing Jinwang Art Purchase E-commerce Co., Ltd.(“Nanjing Jinwang”) It is owned by Huajun Gao and Aimin Kong, each a 11.5% beneficial shareholder of the Company Technological service fee revenue - 17,813 - Kashi Jinwang Art Purchase E-commerce Co., Ltd. 100% owned by Nanjing Jinwang Technological service fee revenue 97,758 132,045 130,169 Total $ 166,325 $ 233,157 $ 213,172 e. Cost of revenues – related party consists of the following: Relationship Nature Year Ended Year Ended Zhongcang Warehouse Co., Ltd. An 18% subsidiary of the VIE of the Company Storage fees $ 304,400 $ 730,006 f. Selling and marketing expenses – related party consists of the following: Relationship Nature Year Ended December 31, 2022 Year Ended December 31, 2021 Kashi Jinwang Art Purchase E-commerce Co., Ltd. 100% owned by Nanjing Jinwang Online advertising expenses $ 43,590 $ 359,967 In 2019, the Company entered into advertising contract with Kashi Jinwang Art Purchase E-commerce Co., Ltd. pursuant to which the Company would use advertising space on Kashi Jinwang’s website from January 1, 2019 to December 31, 2022. The Company was charged a yearly advertising fee of approximately $0.18 million adjustable by actual usage, which was approximately 1.7% of the Company’s initial listing value of collectible or artwork at the time when the contract was entered. On May 1, 2020, the contract between the Company and Kashi Jinwang Art Purchase E-commerce Co., Ltd. was amended and the monthly advertising fee was fixed at 1.5% of the initial listing value of collectible or artwork from May 1, 2020 to December 31, 2022. The contract was further amended on June 25, 2020, pursuant to which the fee will be 2.25% of the initial listing value of collectibles or artwork from July 1, 2020 to December 31, 2020, then return back to 1.5% from January 1, 2021 to December 31, 2022. g. During the years ended December 31, 2022, 2021 and 2020, HKDAEx paid approximately $51,000, $65,000 and $54,000, respectively, to HKFAEx, a company owned by our Chairman for accounting and business administration services. h. The Company entered into a non-cancellable Office Premises Use Contract with Nanjing Culture and Artwork Property Exchange Co., Ltd. which is controlled by Huajun Gao and Aimin Kong, each is a 11.5% beneficial shareholder of the Company, for an office from January 1, 2020 to December 31, 2020 with a monthly rental of approximately $14,000 including VAT taxes. The Company renewed the lease under the same terms from January 1, 2021 to December 31, 2021 and then renewed again to December 31, 2022. Total rental expense for the years ended December 31, 2022, 2021 and 2020 was approximately $151,000, $158,000 and $148,000, respectively. i. Other receivables – related party consist of funds which are held in trading platform trust account entrusted with Nanjing Jinwang. The funds are unrestricted as to immediate withdrawal and use after the Company’s customers completed the necessary administrative procedures from the platform. The Company normally make withdraw monthly. As of March 22, 2023, approximately RMB 6.0 million ($ 0.9 million) was returned to the Company. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Equity | Note 13 – Equity Pursuant to the Amended and Restated Article of Association adopted by a special resolution of the shareholders of the Company dated September 12, 2019, the authorized shares of 50,000,000 ordinary shares were re-designated to 50,000,000 preferred shares of a nominal or par value of USD 0.0001 each. On November 8, 2019, the shareholders of the Company adopted the Second Amended and Restated Articles of Association to effect a 2 for 1 forward share split of the total authorized and issued and outstanding shares of the Company. As a result of the 2 for 1 forward share split, the Company’s total authorized shares are 1,000,000,000 shares comprising of (i) 900,000,000 ordinary shares with a par value of $0.00005 each and (ii) 100,000,000 preferred shares with a par value of $0.00005 each, and the Company’s issued and outstanding ordinary shares increased from 12,400,000 shares to 24,800,000 shares. In addition, all existing shareholders agreed to surrender to the Company as treasury shares, 12.5% of the then outstanding ordinary shares (3,100,000 ordinary shares) for no consideration. On May 28, 2020, all existing shareholders of the Company agreed to surrender an additional 6,510,000 ordinary shares, or 30% of the Company’s then outstanding ordinary shares, at no consideration to be reserved as treasury shares of the Company. On December 1, 2020, the Company completed its IPO of 5,065,000 ordinary shares and 59,400 option shares at a public offering price of $4.00 per share, par value US$0.00005 per share, resulting in net proceeds to the Company of approximately $17.3 million after deducting underwriting commission, offering costs and other expenses. During the year ended December 31, 2020, in connection with the IPO, the Company issued warrants to purchase 409,952 ordinary shares to the underwriters. The underwriters’ warrants have a five-year term and an exercise price of $5.00 per share. On December 17, 2020, the underwriters exercised options to purchase the 409,952 ordinary shares, on a cashless basis, resulting in the issuance of 130,312 ordinary shares. On December 7, 2021, the Company entered into Securities Purchase Agreements (“Agreements”) with two investors (“Investors”), pursuant to which the Company agreed to sell to the Investors in private placements a total of 600,000 ordinary shares (the “Shares”) of the Company, par value $0.00005 per share, at a purchase price of $5.00 per share for $3,000,000 (the “Private Placements”). In connection with offering, the Company has also agreed to issue the warrants to the Investors to purchase up to an aggregate of 600,000 ordinary shares at an exercise price of $6.00 per share (the “Warrants”). The Warrants have a term of one year and are exercisable by the holder at any time after the date of issuance and prior to the expiration of the Warrants. The Shares would be issued pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended. The Company issued 600,000 shares to investors and recorded net proceed of $2.0 million as of December 31, 2021. Subscription receivable amounted to $1.0 million as of December 31, 2021. This receivable was received during the year ended December 31, 2022. On June 6, 2022, the Company entered into a Business Management Consulting Agreement with Jiangsu Siluete Brand Management Co. Ltd. (“Jiangsu Siluete”), pursuant to which the Company agreed to issue 182,280 shares to Gao Mei, who is the shareholder and CEO of Jiangsu Siluete, for consulting fee to Jiangsu Siluete from March 1, 2022 to February 28, 2023. The total stock compensation for the year ended December 31, 2022 was $464,814 based on grant date fair value of $557,777 or $3.06 per share. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in circumstances outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The Company evaluated its warrants and determined the warrants are indexed to the Company’s own stock as the warrants do not contain any exercise contingencies, the warrants’ settlement amount equals the difference between the fair value of the Company’s common stock price and the warrant contract strike price and the only variables which could affect the settlement amount would be inputs to the fair value for a fixed-for-fixed option on equity shares. The Company also analyzed ASC 815-40-25 to determine whether the warrant contracts should be classified in stockholders’ equity in the Company’s balance sheets and concluded that the warrant contracts meet all of the criteria for classification as equity as the Company is not required to net settle. Based on this analysis, the Company determined the warrant contracts should be classified as equity. Following is a summary of the status of warrants outstanding and exercisable as of December 31, 2022: Warrants Weighted Warrants outstanding, as of December 31, 2020 - $ - Issued 600,000 6.00 Exercised - - Expired - - Warrants outstanding, as of December 31, 2021 600,000 $ 6.00 Issued - - Exercised - - Expired 600,000 $ 6.00 Warrants outstanding, as of December 31, 2022 - $ - Warrants exercisable, as of December 31, 2022 - $ - ORIENTAL CULTURE HOLDING LTD. AND SUBSIDIARIES Restricted net assets The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions from its subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by Oriental Culture, the WFOE, its VIE Jiangsu Yanggu and subsidiaries of Jiangsu Yanggu, Nanjing Yanyu, Nanjing Yanqing, Kashi Longrui, and Kashi Dongfang (collectively “Jiangsu Yanggu PRC entities”) only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Jiangsu Yanggu PRC entities. Oriental Culture WFOE and Jiangsu Yanggu PRC entities are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of their registered capital. In addition, Oriental Culture WFOE and Jiangsu Yanggu PRC entities may allocate a portion of their after-tax profits based on PRC accounting standards to an enterprise expansion fund and staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the State Administration of Foreign Exchange (“SAFE”). As a result of the foregoing restrictions, Oriental Culture WFOE and Jiangsu Yanggu PRC entities are restricted in their ability to transfer their net assets to the Company. Foreign exchange and other regulations in the PRC may further restrict Oriental Culture WFOE and Jiangsu Yanggu PRC entities from transferring funds to the Company in the form of dividends, loans and advances. As of December 31, 2022, amounts restricted are the net assets of Oriental Culture WFOE and Jiangsu Yanggu PRC entities, which were approximately $40,620,000. Equity Incentive Plan The Company’s 2021 Omnibus Equity Plan (“the Plan”) was approved by the board of directors on November 8, 2021 by unanimous written consent and approved by the shareholders on December 16, 2021. The Plan allows for awards of up to 4,000,000 ordinary shares. No shares have been granted as of the date of this report. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 14 – Commitments and Contingencies Contingencies From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements. On July 1, 2022, Mr. Huajun Gao and Mr. Aiming Kong, each an 11.5% shareholder of Oriental Culture Holding LTD (the “Company”), were detained by Nan County Public Safety Bureau of Yiyang City, Hunan Province, China. On July 26, 2022, Nan County People’s Procuratorate approved the arrest of Mr. Gao and Mr. Kong with charge of illegal business operation of Nanjing Jinwang Art Purchase E-commerce Co., Ltd., a company controlled by Mr. Gao and Mr. Kong (“Nanjing Jinwang”). On July 1, 2022, the bank accounts of Nanjing Jinwang were frozen by Nan County Public Safety Bureau, including a trust account into which the customers of the Company deposit their security deposits in order to trade on the Company’s two online trading platforms which the Company has entrusted Nanjing Jinwang for escrow. Also, on July 1, 2022, Nan County Public Safety Bureau froze certain bank accounts of Kashi Longrui Business Management Services Co., Ltd. (“Kashi Longrui”), Kashi Dongfang Cangpin Culture Development Co., Ltd. (“Kashi Dongfang”) and Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing Yanyu”), all subsidiaries of Jiangsu Yanggu Culture Development Co., Ltd., the VIE because they, each had business relationship with Nanjing Jinwang. Neither the Company nor its VIE or subsidiaries of its VIE has received any notification for enforcement charges from Nan County Public Safety Bureau, other than cash and short term investment in the frozen bank accounts with balances totaling approximately $16.5 million and due from Nangjng Jinwang of approximately 3.4 million relating to the Nanjing Jinwang investigation as described above as of December 31, 2022. Currently the customers can freely transfer their deposits and make their withdrawals based on their actual needs. Mr. Gao and Mr. Kong are not officers, directors or employees of the Company, its VIE or subsidiaries of the VIE. Due to the investigation of Nanjing Jinwang and frozen bank accounts, the business operations of the Company have been materially and negatively impacted as its customers experienced difficulties withdrawing their security deposits through online banking and have concerns regarding their deposited funds. The Company has taken remedial measures to assist its customers in withdrawing security deposits, such as through manual and in person application with the bank to transfer funds, so that they will have confidence in the Company and continue to list and trade art and collectible products on the online platforms of the Company. However, there can be no assurance that these measures will restore customer confidence in using the Company’s services efficiently or at all. The investigation of Mr. Gao, Mr. Kong and Nanjing Jinwang is ongoing. The Company has and will continue to communicate with Nan County Public Safety Bureau and other government authorities to obtain more information regarding the investigation and to attempt to unfreeze the bank accounts for the subsidiaries of the VIE. The Company will monitor the development of the investigation and will provide additional information concerning its impact on the Company’s business in due course. Variable interest entity structure In the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the Contractual Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the business operations of the WFOE and the VIEs are in compliance with existing PRC laws and regulations in all material respects. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of the management. If the current corporate structure of the Company or the Contractual Arrangements are found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with the changes and the new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current corporate structure or the Contractual Arrangements is remote based on current facts and circumstances. The Company has not provided for deferred income tax liabilities on the PRC entities’ undistributed earnings as of December 31, 2022 and 2021, respectively, because the Company controls the timing of the undistributed earnings and it is probable that such earnings will not be distributed. The Company plans to reinvest those earnings in the PRC indefinitely in the foreseeable future. Lease commitments The Company has three non-cancellable operating lease agreements for three office units. These lease agreements have lease terms expiring between end of June 2022 and July 2024 with a monthly rental of approximately $1,900, $14,000 and $3,900, respectively. Upon adoption of ASU 2016-02 on January 1, 2021 for the Company’s only lease that is over one year, the Company recognized approximately $34,600 of right of use (“ROU”) assets and approximately $34,600 of operating lease liabilities based on the present value of the future minimum rental payments of leases, using incremental borrowing rate of 4.75%. As of December 31, 2022, the Company’s operating leases had a weighted average remaining lease term of approximately 1.50 years and weighted average discount rate was 4.75%. The Company’s commitments for minimum lease payment under these operating leases as of December 31, 2022 are as follows: Twelve months ending December 31, Minimum payment 2023 $ 21,027 2024 11,536 Total undiscounted liabilities 32,563 Less: Imputed interest 264 Total lease liabilities $ 32,299 Rent expense for the years ended December 31, 2022 and 2021 was $179,552 and $186,834, respectively. Coronavirus (“COVID-19”) Beginning in late 2019, there was an outbreak of a novel strain of coronavirus (COVID-19) in China, which has spread rapidly to many parts of the world. To prevent and control the spread of the pandemic, the Chinese governments issued administrative orders to impose travel and public gathering restrictions as well as work from home and self-quarantine restrictions in early 2020. Our business, financial condition, and results of operations have been adversely affected by the outbreak of COVID-19 as our net revenues and net income decreased during the first half of 2020. Starting in July 2020, our revenues and net income recovered as individuals and entities resumed their business activities which were delayed or postponed due to the COVID-19 outbreak. Our revenue and net income increased for the year ended December 31, 2021 compared to 2020 as we recovered from impact of the pandemic. Our revenue and net income decreased for the year ended December 31, 2022 compared to 2021 because the outbreak of the Omicron variant |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 – Subsequent Events The Company has evaluated subsequent events through the date these consolidated financial statements were issued and determined that there were no subsequent events that required recognition or disclosures in the consolidated financial statements. |
Financial Information of the Pa
Financial Information of the Parent Company | 12 Months Ended |
Dec. 31, 2022 | |
Financial Information of the Parent Company [Abstract] | |
Financial information of the parent company | Note 16 – Financial information of the parent company The Company performed a test on the restricted net assets of its consolidated subsidiaries in accordance with the Securities and Exchange Commission Regulation S-X Rule 5-04 and concluded that it was applicable for the Company to disclose the financial statements for the parent company. The subsidiary did not pay any dividends to the Company for the periods presented. For the purpose of presenting parent only financial information, the Company records its investment in its subsidiaries and VIEs under the equity method of accounting. Such investments are presented on the separate condensed balance sheets of the Company as “Investment in subsidiaries and VIEs” and the income of the subsidiaries and VIEs is presented as “Equity income of subsidiaries and VIEs”. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP are not required. The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2022 and 2021. PARENT COMPANY BALANCE SHEETS December 31, December 31, 2022 2021 ASSETS CURRENT ASSETS Cash and cash equivalents $ 14,452,747 $ 22,086,787 Other current asset 1,324,063 491,000 Escrow 600,000 600,000 Other receivable - intercompany 3,224,949 2,862,436 Total current assets 19,601,759 26,040,223 OTHER ASSETS Investment in subsidiary 39,653,486 35,881,493 Total other assets 39,653,486 35,881,493 Total assets $ 59,255,245 $ 61,921,716 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 70,000 $ 140,000 Other payables and accrued liabilities 23,958 Other payables - intercompany 9,569,397 14,569,398 Total current liabilities 9,639,397 14,733,356 Total liabilities 9,639,397 14,733,356 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY Preferred shares, $0.00005 par value, 100,000,000 shares authorized, no - - Ordinary shares, $0.00005 par value, 900,000,000 shares authorized, 30,836,992 and 30,654,712 shares issued, 21,226,992 and 21,044,712 shares outstanding as of December 31, 2022 and 2021, respectively 1,542 1,533 Treasury shares, at cost, 9,610,000 shares (481 ) (481 ) Additional paid-in capital 22,349,767 21,884,962 Subscription receivable - (1,000,000 ) Statutory reserves 124,757 112,347 Retained earnings 28,315,319 25,092,043 Accumulated other comprehensive income (loss) (1,175,056 ) 1,097,956 Total shareholders’ equity 49,615,848 47,188,360 Total liabilities and shareholders’ equity $ 59,255,245 $ 61,921,716 PARENT COMPANY STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Years Ended December 31, 2022 2021 2020 OPERATING EXPENSES: General and administrative $ (2,869,077 ) $ (3,501,857 ) $ (4,452,154 ) Total operating expenses (2,869,077 ) (3,501,857 ) (4,452,154 ) LOSS FROM OPERATIONS (2,869,077 ) 3,501,857 (4,452,154 ) OTHER INCOME (EXPENSE) Finance expense 59,758 1,079 (17,410 ) Other income, net - - - Share of income of subsidiaries 6,045,005 14,945,051 6,517,671 Total other income, net 6,104,763 14,946,130 6,500,261 NET INCOME $ 3,235,686 $ 11,444,273 $ 2,048,107 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (2,273,012 ) 174,841 1,144,657 COMPREHENSIVE INCOME $ 962,674 $ 11,619,114 $ 3,192,764 PARENT COMPANY STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,235,686 $ 11,444,273 $ 2,048,107 Adjustments to reconcile net income to cash used in operating activities: Equity income of subsidiaries and VIEs (6,045,005 ) (14,945,051 ) (6,517,671 ) Change in operating assets and liabilities: Depreciation and amortization - - - (Decrease) increase in accounts payable (70,000 ) (2,820,000 ) 2,960,000 (Decrease) increase in other payables and accrued liabilities (23,958 ) (517,960 ) 50,918 (Increase) in other receivable and other current assets (833,063 ) - - (Increase) in other receivable - intercompany (362,514 ) (2,862,437 ) - Increase (decrease) in other payables - intercompany (5,000,000 ) 13,174,933 (18,993 ) Common stock issue for service 464,814 - - Net cash used in operating activities (8,634,040 ) 3,473,758 (1,477,639 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of intangible assets - - - Net cash used in investing activities - - - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of ordinary shares, net 1,000,000.00 2,000,000 18,090,668 Net cash provided by financing activities 1,000,000.00 2,000,000 18,090,668 CHANGES IN CASH AND CASH EQUIVALENTS (7,634,040 ) 5,473,758 16,613,029 CASH AND CASH EQUIVALENTS, beginning of year 22,086,787 16,613,029 - CASH AND CASH EQUIVALENTS, end of year $ 14,452,747 $ 22,086,787 $ 16,613,029 NON-CASH TRANSACTIONS OF FINANCING ACTIVITIES Business acquisition through issuance of ordinary shares $ - $ - $ - Proceeds from initial public offerings deposited with escrow $ - $ - $ 600,000 Proceeds from initial public offerings offset with intercompany payable $ - $ - $ 1,413,458 |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and information pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries, and their VIEs. All intercompany transactions and balances are eliminated in consolidation. |
Recapitalization | Recapitalization On November 8, 2019, the Company effected a 2 for 1 forward share split of all issued and outstanding ordinary shares of the Company. In addition, all existing shareholders agreed to surrender to the Company as treasury shares, 12.5% of the then outstanding ordinary shares (3,100,000 ordinary shares) for no consideration. On May 28, 2020, all existing shareholders of the Company agreed to surrender 6,510,000 ordinary shares, or 30% of our then outstanding ordinary shares, at no consideration to be reserved as treasury shares of the Company. These transactions were treated as a recapitalization prior to the Company’s initial public offering. All share and per share amounts were retroactively adjusted for this recapitalization for all periods presented. |
Use of estimates and assumptions | Use of estimates and assumptions 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 and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include revenue recognition, allowance for doubtful accounts, the useful lives of property and equipment and intangible assets and impairment of long-lived assets. Actual results could differ from these estimates. |
Foreign currency translation and transactions | Foreign currency translation and transactions The reporting currency of the Company is the U.S. dollar. The functional currency for our holding company is the U.S. dollar. In the PRC, the Company conducts its businesses in the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. In Hong Kong, the Company conducts its business in the local currency, Hong Kong dollar (HKD), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the Federal Reserve at the end of the period. The statements of income and cash flows are translated at the average translation rates during the reporting periods and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss). Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Translation adjustments are included in accumulated other comprehensive income. The balance sheet amounts, with the exception of shareholder’s equity at December 31, 2022 and December 31, 2021 were translated at RMB 6.96 and RMB 6.38 to one U.S. dollar (USD), respectively. The average translation rates applied to the consolidated statements of income and cash flows for years ended December 31, 2022, 2021 and 2020 were RMB 6.73, RMB 6.45 and RMB 6.90 to one USD. The balance sheet amounts, with the exception of shareholder’s equity at December 31, 2022 and 2021 were translated at HKD 7.80 and HKD 7.80 to one USD, respectively. The average translation rates applied to the consolidated statements of income and cash flows for years ended December 31, 2022, 2021 and 2020 were HKD 7.83, HKD 7.77 and HKD 7.76 to one USD, respectively. The shareholder’s equity accounts were translated at their historical rates. Amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. |
Fair value measurement | Fair value measurement The accounting standards regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company. The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurements and enhance disclosure requirements for fair value measures. The three levels are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices, other than those included in Level 1, for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. The carrying amounts included in current assets and current liabilities in the consolidated balance sheets approximate their fair values because of the short-term nature of such instruments. Fair value disclosure: December 31, 2022 Cost Level 1 Level 2 Level 3 Short-term investment (Restricted) $ 4,703,323 $ - $ 4,703,323 $ - December 31, 2021 Cost Level 1 Level 2 Level 3 Short-term investment $ 3,748,900 $ - $ 3,748,900 $ - The Company values its short-term investment using alternative pricing sources and market observable inputs, and accordingly the Company classifies the valuation techniques that use these inputs as Level 2. This investment has original maturities of less than 1 year and the carrying value approximates its fair value. |
Cash and cash equivalents | Cash and equivalents Cash and equivalents consist of cash in bank and money market funds which are unrestricted as to immediate withdrawal and use. |
Restricted cash | Restricted cash On July 1, 2022, Mr. Huajun Gao and Mr. Aiming Kong, each an 11.5% shareholder of Oriental Culture Holding LTD (the “Company”), were detained by Nan County Public Safety Bureau of Yiyang City, Hunan Province, China. On July 26, 2022, Nan County People’s Procuratorate approved the arrest of Mr. Gao and Mr. Kong with a charge of illegal business operation of Nanjing Jinwang Art Purchase E-commerce Co., Ltd., a company controlled by Mr. Gao and Mr. Kong (“Nanjing Jinwang”). On July 1, 2022, Nan County Public Safety Bureau froze certain bank accounts of Kashi Longrui Business Management Services Co., Ltd. (“Kashi Longrui”), Kashi Dongfang Cangpin Culture Development Co., Ltd. (“Kashi Dongfang”) and Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing Yanyu”), all subsidiaries of Jiangsu Yanggu Culture Development Co., Ltd., the variable interest entity of the Company in China (the “VIE”) because they, each had business relationship with Nanjing Jinwang. The total restricted cash was $11,796,388 as of December 31, 2022. |
Short-term investments | Short-term investments The short-term investment is an investment in a bank-issued wealth management product with underlying investments in cash, bonds and equity funds. The investment products are issued by Ping An Bank. The investments have a maturity of less than 1 year and their carrying value approximates their fair value. The gain from sale of these investments is recognized in the statements of income and comprehensive income. Earnings from these investments for the years ended December 31, 2022, 2021 and 2020 was $156,066, $169,065 and $93,007, respectively. Due to the issue mentioned in Restricted cash, all short-term investments were $4,703,323 as of December 31, 2022 was restricted. |
Accounts receivable , net (including related parties) | Accounts receivable, net (including related parties) Accounts receivable is amounts due from the Company’s customers. An allowance for doubtful accounts may be established and recorded based on management’s assessment of potential losses based on the credit history and relationships with the customers. Management reviews its receivables on a regular basis to determine if the allowance for doubtful accounts is adequate and adjusts the allowance when necessary. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. |
Other receivables and prepaid expenses | Other receivables and prepaid expenses Other receivables that are short term include employee advances, such as travel advance, advance to purchase office supplies in the normal course of business and certain short-term deposits. An allowance for doubtful accounts may be established and recorded based on management’s assessment of the likelihood of realization or collection. Management reviews these items on a regular basis to determine if the allowance for doubtful accounts is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of realization or collection is not probable. No allowance was required as of December 31, 2022 or 2021. Prepaid expenses include advance payments made to vendors for certain prepaid services such as system service fees, prepaid rent for our office (with lease under one year) and prepaid taxes. |
Other receivables – related party | Other receivables – related party Other receivables – related party consist of funds which are held on a trading platform trust account with Nanjing Jinwang Art Purchase E-commerce Co., Ltd., which is owned by Huajun Gao and Aimin Kong, each is an 11.5% beneficial owners of the Company. The funds are not restricted and can be withdrawn and used after the Company completes the necessary administrative procedures. The Company normally makes withdrawals from this account monthly. The outstanding balance was paid back to the Company in April 2023. |
Escrow | Escrow In connection with the Company’s initial public offering in December 2020, $600,000 of the net proceeds was deposited into an escrow account as security for the underwriters for 24 months from the closing of the offering to cover any potential claims related to the offering. The full amount of $600,000 was released to the Company in January 2023. |
Deposit | Deposit The Company entered into a memorandum of understanding (“MOU”) to acquire office buildings and the related land use rights in November 2020 with a third-party seller. The close of the transaction was dependent on the seller obtaining a permit regarding the proposed use of the site. Subsequent to December 31, 2020, the Company terminated the MOU as the seller was unable to obtain the required permit and the Company received a full refund of the deposit (see Note 5). |
Property and equipment | Property and equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets with no residual value. The estimated useful lives are as follows: Useful Life Office equipment and furnishings 1 - 5 years Electronic equipment 2 - 5 years Server room equipment 5 years Vehicles 5 years Office building 35 years Leasehold improvements lesser of lease term or expected useful life The cost and related accumulated depreciation and amortization of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of income and other comprehensive income. Expenditures for maintenance and repairs are expensed as incurred, while additions, renewals and betterments, which are expected to extend the useful life of an asset, are capitalized. The Company also re-evaluates the periods of depreciation and amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. Construction-in-progress represents material, contractor and labor costs, design fees and inspection fees in connection with the construction of the Company’s office building in Jiangsu, China. See Note 7 for details. |
Intangible assets, net | Intangible assets, net Intangible assets, net, are stated at cost, less accumulated amortization. Amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets as follows: Classification Estimated Artwork and collectible trading platform 5 years Software 5 years |
Impairment for long-lived assets | Impairment for long-lived assets Long-lived assets, including property and equipment with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the asset based on the undiscounted future cash flows the asset is expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. For the years ended December 31, 2022,2021 and 2020, the Company recorded nil nil |
Investments | Investments Entities in which the Company has the ability to exercise significant influence, but does not have a controlling interest, are accounted for using the equity method. Significant influence is generally considered to exist when the Company has voting shares of 20% to 50%, and other factors, such as representation on the board of directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under this method of accounting, the Company records its proportionate share of the net earnings or losses of equity method investees and a corresponding increase or decrease to the investment balances. Dividends received from the equity method investments are recorded as reductions in the cost of such investments. The Company generally considers an ownership interest of 20% or higher to represent significant influence. The Company accounts for the investments in entities over which it has neither control nor significant influence, and no readily determinable fair value is available, using the investment cost minus any impairment, if necessary. The Company’s investment of 18% ownership of Zhongcang Warehouse Co., Ltd. was $501,802 and $548,151 as of December 31, 2022 and 2021, respectively, and is accounted for using the cost method. In March 2022, the Company’s VIE Jiangsu Yanggu entered into an equity subscription agreement to purchase 11.875% equity interest of Beijing Jiu Yu Ling Jing Technology Co., Ltd. (“JYLJ”), a company incorporated in the PRC, which primarily engages in wine and alcohol product merchants and customers, as well as product launch, brand showcase, marketing and promotion and it is currently in the process of developing a “Wine and Spirits” metaverse, and the amount raised through increase of share capital will be mainly used for this development. JYLJ’s total registered capital is RMB 60 million (approximately USD 9.2 million). Jiangsu Yanggu’s subscription amount is RMB 6 million and RMB 3 million was paid in March 2022. The remaining RMB 3 million is to be paid upon further resolution from the board of JYLJ. As of December 31, 2022, the Company’s investment in YLJ was $430,750, and is accounted for using the cost method. Investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investment is less than its carrying value. An impairment loss is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investment; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated in fair value. No events have occurred that indicated a decline in fair value that is other-than-temporary for the years ended December 31, 2022 and 2021. |
Certificate of deposits | Certificate of deposits The Company has a certificate of deposit with a bank which expires on May 20, 2023 with interest of 3.575%. The Company is subject to an early withdrawal penalty if redeemed before maturity. Interest income was approximately $106,302, $58,000 and nil |
Deferred revenue | Deferred revenue Payments received from customers before all the relevant criteria for revenue recognition are recorded as deferred revenue. December 31, December 31, Beginning balance $ 697,863 $ 243,355 Customer advances 16,803,450 36,991,645 Recognized as revenues (16,993,268 ) (36,542,832 ) Effect of exchange rates (59,008 ) 5,695 Ending balance $ 449,037 $ 697,863 |
Revenue recognition | Revenue recognition The Company follows FASB ASC 606, Revenue from Contracts with Customers, for recognizing its revenue. The core principle underlying the revenue recognition standard is that the Company will recognize revenue to represent the transfer of services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company to identify contractual performance obligations and determine whether revenue should be recognized when control of services transfers to a customer. Under the guidance of ASC 606, the Company is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract and (e) recognize revenue when (or as) the Company satisfies its performance obligation. Revenues are recorded, net of sales related taxes and surcharges. The Company continues to derive its revenues from service contracts with its customers with revenues being recognized upon performance of services. Persuasive evidence of an arrangement is demonstrated via service contracts and invoices; and the consideration to the customer is fixed upon acceptance of the sales contract. At times, the Company offers incentives and rebates to its customers directly and the Company accounts for these incentives payable to customers as a reduction of the contract price. The Company’s revenues are recognized when all performance obligations are satisfied. The Company’s commission expenses to its sales agents are expensed when incurred. The Company is an online provider of collectibles and artwork e-commerce services, which allows artists and art dealers and owners to access the art trading market with a wider range of artwork investors through the Company’s platforms. The Company currently facilitates trading by individual and institutional customers of artwork, collectibles and commodities on the Company’s online platforms. In addition to collectibles and artwork, the Company has also expanded its platform to trade commodities principally teas. The Company generates revenue from its services in connection with the trading of artwork and commodities on its platforms, primarily consisting of listing service fees, transaction fees, marketing services fees and other revenues collected from traders (the Company’s customers). The Company has cooperative agreements with third parties who are experts and possess new ideas and resources for collectibles/commodities business to co-develop certain niche markets (such as vintage coins and teas) to be traded on the Company’s online platforms. These parties are required to place a security deposits with the Company until termination of the cooperative agreements and deposit amounts will need to increase as the trading volume increases. Revenue generated from these niche markets will be shared between the Company and these parties based on pre-agreed rates and trading volume. The Company accounts for the portion of revenue that needs to be reimbursed to the third parties as a reduction of total contract revenue to be received from customers. Approximately nil Listing service fees One-time nonrefundable listing service fees are collected from owners and traders for listing their products on the platform. The Company’s only performance obligation is to provide the listing on the Company’s platform over the period requested. The Company recognizes the related revenue upon the completion of its performance obligations. The fees are determined by contracts with the customers as a fixed percentage of the listing price. Transaction fee revenue Transaction fee revenue is generally calculated based on the transaction value of collectibles, artwork and commodities per transaction. Transaction value is the dollar amount of the purchase or sale of the collectibles, artwork and commodities after they are listed on the Company’s platforms. The Company’s performance obligation is to facilitate the trading transactions. Transaction fee revenue is recognized and collected at the point-in-time when the transaction is completed. Transaction fee revenue also includes predetermined monthly transaction fees for select traders with large transactions and are negotiated on a case-by-case basis. Predetermined transaction fees are recognized and earned over the specified service period. In 2018, the Company started a customer reward points program, pursuant to which reward points were issued for opening a new account or referring customers to open accounts with us during our promotion period. In that regard, customers are required to redeem certain reward points for new listings along with the regular listing services fees. If a customer does not have any reward points, he/she can purchase them from other customers on our platform. The Company does not record revenue when customers redeem any points as it is considered as a prerequisite for a new listing in addition to the regular services fees. The points are traded by and among our customers on the platform and the Company charges a transaction fee from such points trading. The Company assessed if a material right existed when the Company initially issued the reward points and if the points represent a separate performance obligation. In general, the points were given to customers based on existing accounts or promotions without the customers having to acquire services from the Company, therefore there was no material right and no separate performance obligation exists. There is no liability for unredeemed awards. Transaction fee revenue from the trading of reward points amounted to approximately $1.1 million, $3.4 million and $2.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Predetermined transaction fees received in advance of the specified service period are recorded as deferred revenue. Marketing service fees Marketing service fees are usually collected after the Company completes its services and includes the following type of services: (1) For certain marketing service agreements, the Company promises to assist its customer in connection with his/her listing and trading of his/her collectible/artwork or commodities on the Company’s platforms, which mainly includes consultation and supporting services of the marketability for the collectible/artwork; assessing its market value and market acceptance for the collectible/artwork or commodities; and assisting in the application and legal protection required for the customer’s collectible/artwork or commodities to be approved for listing on the Company’s platforms. For marketing service contracts in which the related performance obligations can be completed within a short period of time, the Company recognizes the related revenue upon the completion of its performance obligations. (2) Marketing service agreements also includes providing promotional services for customers’ items as where to place ads on well-known cultural and art exchange websites in China, to provide online and offline marketing services including cooperation with auction houses and participate in industry-related exhibitions and fairs. The marketing service fees are charged based on the type of listing session that the customer applies for and whether the customer has listed and sold collectibles on other platforms before, and they are not tied to the type or value of the underlying collectible/artwork. Marketing service contracts and fees are recognized upon the completion of the performance obligation. Other revenues Other revenues (including related parties of $166,325, $233,157 and $213,172 for the years ended December 31, 2022, 2021 and 2020, respectively) primarily includes service fees for IT technical support to customers and other revenues from agency recommendation fees. IT technical support fees are negotiated on a case by case basis and are recognized when the related services have been performed based on the specific terms of the contract. Agency recommendation fees are mainly training and consulting services provided to certain traders/agents for them to be qualified. Upon completion of the training and consultation, these qualified traders/agents may introduce the Company’s platform and services to potential customers to list their collectibles and artwork with the Company for a fee or promote their own products on the Company’s platforms. The Company’s performance obligation is completed and revenue is recognized upon completion of training and consultation services. The Company disaggregated its revenue into the following four categories: Years Ended 2022 2021 2020 Listing service fees $ 1,244,251 $ 6,900,561 8,405,211 Transaction fees 13,643,958 24,462,861 7,075,283 Marketing service fees 2,749,224 5,750,901 1,370,164 Other revenues* 175,706 482,137 588,144 Total $ 17,813,139 $ 37,596,460 $ 17,438,802 * Including $166,325, $233,157 and $213,172 for the years ended December 31, 2022, 2021 and 2020, respectively, from related parties. |
Cost of revenues | Cost of revenues Cost of revenues consist of compensation including social welfare and benefits for the Company’s IT, risk management and customer services team, appraisal fees, online cloud service fees, storage fees paid to related party, and depreciation and amortization of hardware and software for the Company’s trading platforms. |
Selling and marketing expenses: | Selling and marketing expenses: Selling and marketing expenses includes salary and benefits for our employees in the sales and marketing department and marketing and advertising expenses. Selling expenses also include incentive payments to third parties that refer new traders to utilize the Company’s e-commerce trading platforms. Website advertising expenses which are included in selling and marketing expenses to related party were $43,590, $359,968 and $1,762,652 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Value added taxes (“VAT”) | Value added taxes (“VAT”) Revenue is the invoiced value of services, net of VAT. The VAT is based on the gross sales price and VAT rates range up to 6%, depending on the type of services provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. The net VAT balance between input VAT and output VAT is recorded in taxes payable or other receivables and prepaid expenses. All VAT returns filed by the Company’s subsidy, VIE and its subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing. |
Income taxes | Income taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes.” Under the asset and liability method as required by this accounting standard, deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax. Deferred tax liabilities are recognized for all future taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable income will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred taxes are charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Net deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that has a greater than 50% likelihood of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income taxes are classified as income tax expense in the period incurred. PRC tax returns filed in 2021 are subject to examination by the applicable tax authorities. Tax returns filed in Hong Kong from 2018 to 2021 are subject to examination. |
Leases | Leases The Company adopted FASB ASU 2016-02, “Leases” (Topic 842) for the year ended December 31, 2021, and elected the practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Upon adoption, the Company recognized $34,608 of a right of use (“ROU”) assets and same amount of lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 4.75% based on the duration of lease terms. Operating lease ROU assets and lease liabilities are recognized at the adoption date or the commencement date, whichever is earlier, based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company used its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term. Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company reviews for impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows. |
Other Income, net | Other Income, net Other income includes government subsidies from Xinjiang Province of approximately $240,000 to promote local business development of various industries, Kashi Dongfang qualified in establishing business in Kashi, there is no services required on Kashi Dongfang and no further commitment for the grant. Other income also includes VAT refund of approximately $61,000. As part of VAT reform in 2019, a taxpayer in certain service industries was allowed to reclaim an additional 10% of input VAT credit against the amount of VAT payable from April 1, 2019 to December 31, 2022. Other income also includes approximately $112,000 rental income that the Company subleased part of the office building in 2022. The net other income is approximately $269,000, $193,000 and $169,000 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical factors and the specific facts and circumstances of each matter. |
Earnings per share (“EPS”) | Earnings per share (“EPS”) Basic EPS are computed by dividing income available to shareholders of the Company by the weighted average ordinary shares outstanding during the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares (outstanding warrants) were exercised and converted into ordinary shares. For the years ended December 31, 2022, 2021 and 2020, there were no dilutive shares. |
Statutory Reserves | Statutory Reserves Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profits to the non-distributable statutory surplus reserve fund. Subject to certain cumulative limits, the statutory surplus reserve fund requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end. If the Company has accumulated losses from prior periods, the Company is able to use the current period net income after tax to offset against the accumulated loss. For the years ended December 31, 2022, 2021 and 2020, the Company appropriated $12,410, which is from Yanyu, $0 and $0 to the statutory reserve fund. The Company has met the required maximum contributions to the statutory reserves for both of its operating entities in China, Kashi Dongfang and Kashi Longrui. |
Employee benefits | Employee benefits Full-time employees of the Company are entitled to staff welfare benefits including medical care, housing funds, pension benefits, unemployment insurance and other welfare benefits, which are government mandated defined contribution plans. The Company is required to accrue for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans. The expenses for the plans were $124,856, $105,565 and $61,305, for the years ended December 31, 2022, 2021 and 2020, respectively. |
Segments | Segments FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the Chief Executive Officer of the Company, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has only one operating segment and therefore one reportable segment as defined by ASC 280, which is facilitating e-commerce of artwork/collectables trading. All of the Company’s net revenues were generated in the PRC and Hong Kong. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments — Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments — Credit Losses — Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-02 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses, leases, and hedging standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022. The adoption of this ASU is not expected to have a material effect on the Company’s consolidated financial statements. Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income and comprehensive income and statements of cash flows. |
Nature of Business and Organi_2
Nature of Business and Organization (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Nature of Business and Organization [Abstract] | |
Schedule of consolidated financial statements reflect the activities of the company | Name Background Ownership China International Assets and Equity of Artworks Exchange Limited (“International Culture”) ● A Hong Kong company ● Incorporated on November 22, 2013, commenced operations in March 2018. ● Engages in providing an online platform that facilitates e-commerce of collectible and artwork trading 100% HKDAEx Limited (“HKDAEx”) ● A Hong Kong company ● Incorporated on April 18, 2018 ● Engages in providing an online platform that facilitates e-commerce of certain commodities trading 100% Oriental Culture BVI ● A British Virgin Islands company ● Incorporated on December 6, 2018 100% Oriental Culture HK ● A Hong Kong company ● Incorporated on January 3, 2019 100% owned by Oriental Culture BVI Oriental Culture WFOE ● A PRC limited liability company and deemed a wholly foreign owned enterprise (“WFOE”) ● Incorporated on May 7, 2019 100% owned by Oriental Culture HK Jiangsu Yanggu ● A PRC limited liability company ● Incorporated on August 23, 2017, commenced operations in March 2018. ● Holding company of Nanjing Yanyu and Nanjing Yanqing VIE of Oriental Culture WFOE Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing Yanyu”) ● A PRC limited liability company ● Incorporated on June 7, 2018 ● Provides support services to Jiangsu Yanggu, International Culture, HKDAEx, Kashi Longrui and Kashi Dongfang 100% owned by Jiangsu Yanggu Nanjing Yanqing Information Technology Co., Ltd. (“Nanjing Yanqing”) ● A PRC limited liability company ● Incorporated on May 17, 2018 ● Holding company of Kashi Longrui and Kashi Dongfang 100% owned by Jiangsu Yanggu Kashi Longrui Business Management Service Co., Ltd. (“Kashi Longrui”) ● A PRC limited liability company ● Incorporated on July 19, 2018 ● Operating entity provides marketing services 100% owned by Nanjing Yanqing Kashi Dongfang Cangpin Culture Development Co., Ltd. (“Kashi Dongfang”) ● A PRC limited liability company ● Incorporated on August 29, 2018 ● Operating entity provides listing and warehouse services 100% owned by Nanjing Yanqing |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of fair value disclosure | December 31, 2022 Cost Level 1 Level 2 Level 3 Short-term investment (Restricted) $ 4,703,323 $ - $ 4,703,323 $ - December 31, 2021 Cost Level 1 Level 2 Level 3 Short-term investment $ 3,748,900 $ - $ 3,748,900 $ - |
Schedule of property and equipment are stated at cost less accumulated depreciation and amortization | Useful Life Office equipment and furnishings 1 - 5 years Electronic equipment 2 - 5 years Server room equipment 5 years Vehicles 5 years Office building 35 years Leasehold improvements lesser of lease term or expected useful life |
Schedule of amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets | Classification Estimated Artwork and collectible trading platform 5 years Software 5 years |
Schedule of payments received from customer | December 31, December 31, Beginning balance $ 697,863 $ 243,355 Customer advances 16,803,450 36,991,645 Recognized as revenues (16,993,268 ) (36,542,832 ) Effect of exchange rates (59,008 ) 5,695 Ending balance $ 449,037 $ 697,863 |
Schedule of disaggregated its revenue | Years Ended 2022 2021 2020 Listing service fees $ 1,244,251 $ 6,900,561 8,405,211 Transaction fees 13,643,958 24,462,861 7,075,283 Marketing service fees 2,749,224 5,750,901 1,370,164 Other revenues* 175,706 482,137 588,144 Total $ 17,813,139 $ 37,596,460 $ 17,438,802 * Including $166,325, $233,157 and $213,172 for the years ended December 31, 2022, 2021 and 2020, respectively, from related parties. |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Variable Interest Entity [Abstract] | |
Schedule of VIEs’ consolidated assets and liabilities | December 31, December 31, Current asset: $ 34,200,319 $ 26,650,671 Property and equipment, net 9,417,777 9,890,566 Other noncurrent assets 1,049,683 3,801,822 Total assets 44,667,779 40,343,059 Total liabilities (4,047,943 ) (3,687,973 ) Total net assets $ 40,619,836 $ 36,655,086 December 31, December 31, Current liabilities: Accounts payable $ 2,889,312 $ 1,483,827 Accounts payable – related parties 28,727 1,665 Deferred revenue 449,037 697,863 Other payables and accrued liabilities 667,495 1,474,792 Taxes payable 13,372 29,826 Total liabilities $ 4,047,943 $ 3,687,973 |
Schedule of operating results of the VIEs | Years Ended 2022 2021 2020 Operating revenues $ 17,813,254 $ 37,596,460 $ 17,438,918 Income from operations $ 6,728,516 $ 15,203,703 $ 6,793,583 Net income $ 7,314,651 $ 15,762,806 $ 6,948,599 |
Accounts Receivables, Net (Tabl
Accounts Receivables, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivables, Net [Abstract] | |
Schedule of company’s net accounts receivable | December 31, December 31, 2022 2021 Trade accounts receivable $ 43,282 $ 156,852 Less: allowance for doubtful accounts (43,075 ) (109,792 ) Accounts receivable, net $ 207 $ 47,060 |
Other Receivables and Prepaid_2
Other Receivables and Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Receivables and Prepaid Expenses [Abstract] | |
Schedule of other receivables | December 31, December 31, Rent and other deposits $ 16,296 $ 14,716 Advance to third parties* 2,799,874 - Employee advances and others 915,242 8,095 Prepaid VAT taxes 63,682 226,206 Prepaid consulting fee 646,852 1,136,377 Total other receivables and prepaid expenses $ 4,441,946 $ 1,385,394 * This advance was short term, non-interest bearing and due on demand. The Company collected full amount of advance by March 22, 2023. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, Net [Abstract] | |
Schedule of Property and equipment | December 31, December 31, Office and electronic equipment $ 328,305 $ 355,937 Vehicle 765,250 744,581 Furniture and leasehold improvement 31,285 29,498 Office building 8,457,598 9,238,795 Construction in process 599,319 - Less: accumulated depreciation (758,044 ) (464,522 ) Total $ 9,423,713 $ 9,904,289 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | December 31, December 31, Artwork trading platform $ 797,568 $ 793,310 Software 933,732 902,313 Copyright - - Less: accumulated amortization and impairment (914,415 ) (575,602 ) Total $ 816,885 $ 1,120,021 |
Schedule of future amortization | Twelve Months Ending December 31, Estimated 2023 $ 320,713 2024 196,955 2025 161,581 2026 136,099 2027 1,537 Total $ 816,885 |
Other Payables and Accrued Li_2
Other Payables and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Payables and Accrued Liabilities [Abstract] | |
Schedule of other payables and accrued liabilities | December 31, December 31, Security deposits payable* $ 157,961 $ 172,552 Salary payable** 97,052 884,825 Others 35,137 226,858 Total $ 290,150 $ 1,284,235 * The Company signed cooperation agreements with third parties to co-develop a niche market for its online platforms. The Company provides its platforms and users to promote products provided by the third party developers. Revenue generated from the niche markets will be shared between the Company and these parties. These third- party developers also guarantee certain sales volume yearly and the security deposit will be paid to the Company to make up for the sales target shortfalls at the end of the year. Any remaining security deposits will be returned to these parties upon dissolution of the cooperation agreements. The Company returned approximately nil and recognized approximately nil of deposits for target shortfalls as revenue for the years ended December 31, 2022. The Company returned approximately $314,000 and recognized approximately $119,000 of deposits for target shortfalls as revenue for the year ended December 31, 2021. No deposit were returned and no revenue was recognized for the year ended December 31, 2020. ** During the years ended December 31, 2022, 2021 and 2020, the Company accrued bonuses payable of approximately $40,203, $789,325 and $256,000, respectively. |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective tax rate | December 31, December 31, China income tax rate 25.0 % 25.0 % Tax exemption/preferential rate reduction (21.1 )% (21.6 )% Change in valuation allowance (3.8 )% (3.4 )% Effective tax rate 0.1 % - |
Schedule of components of deferred tax assets | December 31, December 31, Net operating losses $ 961,468 $ 820,610 Allowance for doubtful accounts 10,769 27,125 Less: valuation allowance (972,237 ) (847,735 ) Deferred tax assets, net $ - $ - |
Schedule of valuation allowance for deferred tax assets | December 31, December 31, Beginning balance $ 847,735 $ 452,009 Additions 124,502 395,726 Ending balance $ 972,237 $ 847,735 |
Schedule of taxes payable | December 31, December 31, VAT payable $ 6,858 $ 27,077 Other taxes payable 6,514 2,749 Total $ 13,372 $ 29,826 |
Concentration of Credit Risk (T
Concentration of Credit Risk (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Concentration of Credit Risk [Abstract] | |
Schedule of accounts receivable | December 31, December 31, Amount % Amount % Customer A $ 43,075 59.3 % $ 47,054 28.5 % Customer B $ 16,345 22.5 % $ - - Customer C $ 12,966 17.9 % $ - - Customer D $ - 0.0 % $ 109,792 66.6 % |
Related party transactions (Tab
Related party transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of accounts receivable – related parties | Relationship Nature December 31, 2022 December 31, 2021 Nanjing Culture Exchange Art Property Exchange Co., Ltd. (“Nanjing Culture”) Mr. Huajun Gao, the general manager and director of Nanjing Culture, and Mr. Aimin Kong, the vice chairman of Nanjing Culture, each beneficially owns 11.5% shares of the Company Receivable from technological service fee revenue $ 16,345 $ 6,070 Jinling Cultural Property Exchange Co., Ltd.(“Jinling Cultural”) Its major shareholder is also a major shareholder of Jiangsu Yanggu Receivable from technological service fee revenue 12,966 2,023 Total $ 29,311 $ 8,093 |
Schedule of other payables – related parties | Relationship Nature December 31, December 31, Kashi Jinwang Art Purchase E-commerce Co., Ltd. 100% owned by Nanjing Jinwang Art Purchase E-commerce Co., Ltd., a related party of the Company Payable for online advertising expenses - 1,665 Zhongcang Warehouse Co., Ltd. An 18% subsidiary of the VIE of the Company Payable for storage fees 28,727 - Total $ 28,727 $ 1,665 |
Schedule of other payables – related parties | Relationship December 31, December 31, Mun Wah Wan Chairman of the board of directors of the Company 3,262 - Total $ 3,262 $ - |
Schedule of net revenues – related parties | Relationship Nature Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Nanjing Culture Mr. Huajun Gao, the general manager and director of Nanjing Culture, and Mr. Aimin Kong, the vice chairman of Nanjing Culture, each beneficially owns 11.5% shares of the Company Technological service fee revenue $ 29,934 $ 38,959 $ 41,571 Jinling Cultural It is owned by our 11.5% beneficial shareholder, Huajun Gao Technological service fee revenue 21,542 22,519 21,042 Hunan Huaqiang Artwork Trading Center Co., Ltd. 49% owned by Jinling Cultural Technological service fee revenue 17,091 21,821 20,390 Nanjing Jinwang Art Purchase E-commerce Co., Ltd.(“Nanjing Jinwang”) It is owned by Huajun Gao and Aimin Kong, each a 11.5% beneficial shareholder of the Company Technological service fee revenue - 17,813 - Kashi Jinwang Art Purchase E-commerce Co., Ltd. 100% owned by Nanjing Jinwang Technological service fee revenue 97,758 132,045 130,169 Total $ 166,325 $ 233,157 $ 213,172 |
Schedule of cost of revenues – related party | Relationship Nature Year Ended Year Ended Zhongcang Warehouse Co., Ltd. An 18% subsidiary of the VIE of the Company Storage fees $ 304,400 $ 730,006 |
Schedule of selling and marketing expenses – related party | Relationship Nature Year Ended December 31, 2022 Year Ended December 31, 2021 Kashi Jinwang Art Purchase E-commerce Co., Ltd. 100% owned by Nanjing Jinwang Online advertising expenses $ 43,590 $ 359,967 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of warrants outstanding and exercisable | Warrants Weighted Warrants outstanding, as of December 31, 2020 - $ - Issued 600,000 6.00 Exercised - - Expired - - Warrants outstanding, as of December 31, 2021 600,000 $ 6.00 Issued - - Exercised - - Expired 600,000 $ 6.00 Warrants outstanding, as of December 31, 2022 - $ - Warrants exercisable, as of December 31, 2022 - $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of commitments for minimum lease payment under these operating leases | Twelve months ending December 31, Minimum payment 2023 $ 21,027 2024 11,536 Total undiscounted liabilities 32,563 Less: Imputed interest 264 Total lease liabilities $ 32,299 |
Financial Information of the _2
Financial Information of the Parent Company (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Financial Information of the Parent Company [Abstract] | |
Schedule of parent company balance sheets | December 31, December 31, 2022 2021 ASSETS CURRENT ASSETS Cash and cash equivalents $ 14,452,747 $ 22,086,787 Other current asset 1,324,063 491,000 Escrow 600,000 600,000 Other receivable - intercompany 3,224,949 2,862,436 Total current assets 19,601,759 26,040,223 OTHER ASSETS Investment in subsidiary 39,653,486 35,881,493 Total other assets 39,653,486 35,881,493 Total assets $ 59,255,245 $ 61,921,716 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 70,000 $ 140,000 Other payables and accrued liabilities 23,958 Other payables - intercompany 9,569,397 14,569,398 Total current liabilities 9,639,397 14,733,356 Total liabilities 9,639,397 14,733,356 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY Preferred shares, $0.00005 par value, 100,000,000 shares authorized, no - - Ordinary shares, $0.00005 par value, 900,000,000 shares authorized, 30,836,992 and 30,654,712 shares issued, 21,226,992 and 21,044,712 shares outstanding as of December 31, 2022 and 2021, respectively 1,542 1,533 Treasury shares, at cost, 9,610,000 shares (481 ) (481 ) Additional paid-in capital 22,349,767 21,884,962 Subscription receivable - (1,000,000 ) Statutory reserves 124,757 112,347 Retained earnings 28,315,319 25,092,043 Accumulated other comprehensive income (loss) (1,175,056 ) 1,097,956 Total shareholders’ equity 49,615,848 47,188,360 Total liabilities and shareholders’ equity $ 59,255,245 $ 61,921,716 |
Schedule of parent company statements of income and comprehensive income | Years Ended December 31, 2022 2021 2020 OPERATING EXPENSES: General and administrative $ (2,869,077 ) $ (3,501,857 ) $ (4,452,154 ) Total operating expenses (2,869,077 ) (3,501,857 ) (4,452,154 ) LOSS FROM OPERATIONS (2,869,077 ) 3,501,857 (4,452,154 ) OTHER INCOME (EXPENSE) Finance expense 59,758 1,079 (17,410 ) Other income, net - - - Share of income of subsidiaries 6,045,005 14,945,051 6,517,671 Total other income, net 6,104,763 14,946,130 6,500,261 NET INCOME $ 3,235,686 $ 11,444,273 $ 2,048,107 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (2,273,012 ) 174,841 1,144,657 COMPREHENSIVE INCOME $ 962,674 $ 11,619,114 $ 3,192,764 |
Schedule of parent company statements of cash flows | For the Years Ended December 31, 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,235,686 $ 11,444,273 $ 2,048,107 Adjustments to reconcile net income to cash used in operating activities: Equity income of subsidiaries and VIEs (6,045,005 ) (14,945,051 ) (6,517,671 ) Change in operating assets and liabilities: Depreciation and amortization - - - (Decrease) increase in accounts payable (70,000 ) (2,820,000 ) 2,960,000 (Decrease) increase in other payables and accrued liabilities (23,958 ) (517,960 ) 50,918 (Increase) in other receivable and other current assets (833,063 ) - - (Increase) in other receivable - intercompany (362,514 ) (2,862,437 ) - Increase (decrease) in other payables - intercompany (5,000,000 ) 13,174,933 (18,993 ) Common stock issue for service 464,814 - - Net cash used in operating activities (8,634,040 ) 3,473,758 (1,477,639 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of intangible assets - - - Net cash used in investing activities - - - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of ordinary shares, net 1,000,000.00 2,000,000 18,090,668 Net cash provided by financing activities 1,000,000.00 2,000,000 18,090,668 CHANGES IN CASH AND CASH EQUIVALENTS (7,634,040 ) 5,473,758 16,613,029 CASH AND CASH EQUIVALENTS, beginning of year 22,086,787 16,613,029 - CASH AND CASH EQUIVALENTS, end of year $ 14,452,747 $ 22,086,787 $ 16,613,029 NON-CASH TRANSACTIONS OF FINANCING ACTIVITIES Business acquisition through issuance of ordinary shares $ - $ - $ - Proceeds from initial public offerings deposited with escrow $ - $ - $ 600,000 Proceeds from initial public offerings offset with intercompany payable $ - $ - $ 1,413,458 |
Nature of Business and Organi_3
Nature of Business and Organization (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 28, 2021 | May 08, 2019 | |
Nature of Business and Organization (Details) [Line Items] | |||
Oriental culture WFOE receive percentage | 100% | ||
Equity interest (in Dollars) | $ 10 | ||
Jiangsu Yanggu [Member] | |||
Nature of Business and Organization (Details) [Line Items] | |||
Equity interests, percentage | 100% | ||
Net income percentage | 100% | ||
Obligation income percentage | 100% | ||
May 7, 2039 [Member] | |||
Nature of Business and Organization (Details) [Line Items] | |||
Agreement term | 20 years | ||
Financial Supporting Agreements [Member] | |||
Nature of Business and Organization (Details) [Line Items] | |||
Obligation income percentage | 100% | ||
Financial Supporting Agreements [Member] | May 7, 2039 [Member] | |||
Nature of Business and Organization (Details) [Line Items] | |||
Agreement term | 20 years | ||
Business Combination [Member] | Jiangsu Yanggu [Member] | |||
Nature of Business and Organization (Details) [Line Items] | |||
Equity interests, percentage | 50% |
Nature of Business and Organi_4
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company | 12 Months Ended |
Dec. 31, 2022 | |
China International Assets and Equity of Artworks Exchange Limited [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | China International Assets and Equity of Artworks Exchange Limited (“International Culture”) |
Background | ● A Hong Kong company ● Incorporated on November 22, 2013, commenced operations in March 2018. ● Engages in providing an online platform that facilitates e-commerce of collectible and artwork trading |
Ownership | 100% |
HKDAEx Limited [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | HKDAEx Limited (“HKDAEx”) |
Background | ● A Hong Kong company ● Incorporated on April 18, 2018 ● Engages in providing an online platform that facilitates e-commerce of certain commodities trading |
Ownership | 100% |
Oriental Culture BVI [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Oriental Culture BVI |
Background | ● A British Virgin Islands company ● Incorporated on December 6, 2018 |
Ownership | 100% |
Oriental Culture HK [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Oriental Culture HK |
Background | ● A Hong Kong company ● Incorporated on January 3, 2019 |
Ownership | 100% owned by Oriental Culture BVI |
Oriental Culture WFOE [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Oriental Culture WFOE |
Background | ● A PRC limited liability company and deemed a wholly foreign owned enterprise (“WFOE”) ● Incorporated on May 7, 2019 |
Ownership | 100% owned by Oriental Culture HK |
Jiangsu Yanggu [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Jiangsu Yanggu |
Background | ● A PRC limited liability company ● Incorporated on August 23, 2017, commenced operations in March 2018. ● Holding company of Nanjing Yanyu and Nanjing Yanqing |
Ownership | VIE of Oriental Culture WFOE |
Nanjing Yanyu Information Technology Co., Ltd. [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Nanjing Yanyu Information Technology Co., Ltd. (“Nanjing Yanyu”) |
Background | ● A PRC limited liability company ● Incorporated on June 7, 2018 ● Provides support services to Jiangsu Yanggu, International Culture, HKDAEx, Kashi Longrui and Kashi Dongfang |
Ownership | 100% owned by Jiangsu Yanggu |
Nanjing Yanqing Information Technology Co., Ltd. [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Nanjing Yanqing Information Technology Co., Ltd. (“Nanjing Yanqing”) |
Background | ● A PRC limited liability company ● Incorporated on May 17, 2018 ● Holding company of Kashi Longrui and Kashi Dongfang |
Ownership | 100% owned by Jiangsu Yanggu |
Kashi Longrui Business Management Service Co., Ltd. [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Kashi Longrui Business Management Service Co., Ltd. (“Kashi Longrui”) |
Background | ● A PRC limited liability company ● Incorporated on July 19, 2018 ● Operating entity provides marketing services |
Ownership | 100% owned by Nanjing Yanqing |
Kashi Dongfang Cangpin Culture Development Co., Ltd. [Member] | |
Nature of Business and Organization (Details) - Schedule of consolidated financial statements reflect the activities of the company [Line Items] | |
Name | Kashi Dongfang Cangpin Culture Development Co., Ltd. (“Kashi Dongfang”) |
Background | ● A PRC limited liability company ● Incorporated on August 29, 2018 ● Operating entity provides listing and warehouse services |
Ownership | 100% owned by Nanjing Yanqing |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) ¥ / shares in Units, ¥ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||||||
Jul. 01, 2022 | Nov. 08, 2019 shares | Mar. 31, 2022 USD ($) | Dec. 31, 2020 USD ($) | May 28, 2020 shares | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jan. 31, 2023 USD ($) | Dec. 31, 2022 ¥ / shares | Dec. 31, 2022 $ / shares | Mar. 31, 2022 CNY (¥) | Dec. 31, 2021 ¥ / shares | Dec. 31, 2021 $ / shares | Dec. 31, 2020 ¥ / shares | Dec. 31, 2020 $ / shares | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||||||||||
Outstanding ordinary shares percentage | 12.50% | 30% | ||||||||||||||
Number of ordinary shares (in Shares) | shares | 3,100,000 | |||||||||||||||
Aggregate number of surrendered shares (in Shares) | shares | 6,510,000 | |||||||||||||||
Shareholder’s equity per share | (per share) | ¥ 6.96 | $ 7.8 | ¥ 6.38 | $ 7.8 | ||||||||||||
Income and cash flows per share | (per share) | ¥ 6.73 | $ 7.83 | ¥ 6.45 | $ 7.77 | ¥ 6.9 | $ 7.76 | ||||||||||
Investment maturity period | 1 year | |||||||||||||||
Shareholder percentage | 11.50% | |||||||||||||||
Restricted Cash, Current | $ 11,796,388 | |||||||||||||||
Gain from investment | 156,066 | 169,065 | $ 93,007 | |||||||||||||
Short-term investment | $ 4,703,323 | 3,748,900 | ||||||||||||||
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | 11.5% | |||||||||||||||
Net proceeds deposited in escrow account | $ 600,000 | |||||||||||||||
Full amount | $ 600,000 | |||||||||||||||
Impairment loss | 25,590 | |||||||||||||||
Investment | 932,552 | 548,151 | ||||||||||||||
Equity interest percentage | 11.875% | |||||||||||||||
Registered capital | $ 9,200,000 | ¥ 60 | ||||||||||||||
Investment cost | $ 430,750 | |||||||||||||||
Interest rate | 3.575% | |||||||||||||||
Interest income | $ 106,302 | 58,000 | ||||||||||||||
Gross revenue generated from contracts | 119,000 | 62,000 | ||||||||||||||
Transaction fee revenue | 1,100,000 | 3,400,000 | 2,600,000 | |||||||||||||
Other revenues from related party | 166,325 | 233,157 | 213,172 | |||||||||||||
Selling and marketing expenses-related party | $ 43,590 | 359,968 | 1,762,652 | |||||||||||||
VAT Percentage Rate | 6% | |||||||||||||||
Tax benefit percentage | 50% | |||||||||||||||
Right of use | $ 34,608 | |||||||||||||||
Borrowing rate | 4.75% | |||||||||||||||
Other income | $ 240,000 | |||||||||||||||
Refund amount | $ 61,000 | |||||||||||||||
Other income percent | 10% | |||||||||||||||
Rental income | $ 112,000 | |||||||||||||||
Allowance for doubtful accounts | $ 269,000 | 193,000 | 169,000 | |||||||||||||
Statutory surplus reserve fund | 10% | |||||||||||||||
Registered capital percentage | 50% | |||||||||||||||
Statutory reserve fund | $ 12,410 | 0 | 0 | |||||||||||||
Employee benefits expense | $ 124,856 | 105,565 | $ 61,305 | |||||||||||||
Number of operating segment | 1 | |||||||||||||||
Number of reportable segment | 1 | |||||||||||||||
Zhongcang Warehouse Co., Ltd [Member] | ||||||||||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||||||||||
Equity ownership interest percentage | 20% | |||||||||||||||
Investments | 18% | |||||||||||||||
Investment | $ 501,802 | $ 548,151 | ||||||||||||||
Minimum [Member] | ||||||||||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||||||||||
Voting shares percentage | 20% | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||||||||||
Voting shares percentage | 50% | |||||||||||||||
Jiangsu Yanggu [Member] | ||||||||||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||||||||||
Subscription amount | $ 3,000,000 | 6 | ||||||||||||||
Remaining amount (in Yuan Renminbi) | ¥ | ¥ 3 | |||||||||||||||
Short-Term Investments [Member] | ||||||||||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||||||||||
Investment maturity period | 1 year |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of fair value disclosure - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies (Details) - Schedule of fair value disclosure [Line Items] | ||
Short-term investment (Restricted) | $ 4,703,323 | $ 3,748,900 |
Level 1 [Member] | ||
Summary of Significant Accounting Policies (Details) - Schedule of fair value disclosure [Line Items] | ||
Short-term investment (Restricted) | ||
Level 2 [Member] | ||
Summary of Significant Accounting Policies (Details) - Schedule of fair value disclosure [Line Items] | ||
Short-term investment (Restricted) | 4,703,323 | 3,748,900 |
Level 3 [Member] | ||
Summary of Significant Accounting Policies (Details) - Schedule of fair value disclosure [Line Items] | ||
Short-term investment (Restricted) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment are stated at cost less accumulated depreciation and amortization | 12 Months Ended |
Dec. 31, 2022 | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Leasehold improvements | lesser of lease term or expected useful life |
Office equipment and furnishings [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 1 year |
Office equipment and furnishings [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Electronic equipment [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 2 years |
Electronic equipment [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Server room equipment [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Vehicles [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Office building [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 35 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets | 12 Months Ended |
Dec. 31, 2022 | |
Artwork and collectible trading platform [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 5 years |
Software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details) - Schedule of payments received from customer - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of payments received from customer [Abstract] | ||
Beginning balance | $ 697,863 | $ 243,355 |
Customer advances | 16,803,450 | 36,991,645 |
Recognized as revenues | (16,993,268) | (36,542,832) |
Effect of exchange rates | (59,008) | 5,695 |
Ending balance | $ 449,037 | $ 697,863 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details) - Schedule of disaggregated its revenue - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Schedule of disaggregated its revenue [Abstract] | ||||
Listing service fees | $ 1,244,251 | $ 6,900,561 | $ 8,405,211 | |
Transaction fees | 13,643,958 | 24,462,861 | 7,075,283 | |
Marketing service fees | 2,749,224 | 5,750,901 | 1,370,164 | |
Other revenues* | [1] | 175,706 | 482,137 | 588,144 |
Total | $ 17,813,139 | $ 37,596,460 | $ 17,438,802 | |
[1] Including $166,325, $233,157 and $213,172 for the years ended December 31, 2022, 2021 and 2020, respectively, from related parties. |
Variable Interest Entity (Detai
Variable Interest Entity (Details) | Jan. 28, 2021 |
Variable Interest Entity [Abstract] | |
Equity interest | 10% |
Variable Interest Entity (Det_2
Variable Interest Entity (Details) - Schedule of VIEs’ consolidated assets and liabilities - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of VIEs’ consolidated assets and liabilities [Abstract] | ||
Current asset: | $ 34,200,319 | $ 26,650,671 |
Property and equipment, net | 9,417,777 | 9,890,566 |
Other noncurrent assets | 1,049,683 | 3,801,822 |
Total assets | 44,667,779 | 40,343,059 |
Total liabilities | (4,047,943) | (3,687,973) |
Total net assets | 40,619,836 | 36,655,086 |
Current liabilities: | ||
Accounts payable | 2,889,312 | 1,483,827 |
Accounts payable – related parties | 28,727 | 1,665 |
Deferred revenue | 449,037 | 697,863 |
Other payables and accrued liabilities | 667,495 | 1,474,792 |
Taxes payable | 13,372 | 29,826 |
Total liabilities | $ 4,047,943 | $ 3,687,973 |
Variable Interest Entity (Det_3
Variable Interest Entity (Details) - Schedule of operating results of the VIEs - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of operating results of the VIEs [Abstract] | |||
Operating revenues | $ 17,813,254 | $ 37,596,460 | $ 17,438,918 |
Income from operations | 6,728,516 | 15,203,703 | 6,793,583 |
Net income | $ 7,314,651 | $ 15,762,806 | $ 6,948,599 |
Accounts Receivables, Net (Deta
Accounts Receivables, Net (Details) - Schedule of company’s net accounts receivable - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of company’s net accounts receivable [Abstract] | ||
Trade accounts receivable | $ 43,282 | $ 156,852 |
Less: allowance for doubtful accounts | (43,075) | (109,792) |
Accounts receivable, net | $ 207 | $ 47,060 |
Other Receivables and Prepaid_3
Other Receivables and Prepaid Expenses (Details) - Schedule of other receivables - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of other receivables [Abstract] | |||
Rent and other deposits | $ 16,296 | $ 14,716 | |
Advance to third parties | [1] | 2,799,874 | |
Employee advances and others | 915,242 | 8,095 | |
Prepaid VAT taxes | 63,682 | 226,206 | |
Prepaid consulting fee | 646,852 | 1,136,377 | |
Total other receivables and prepaid expenses | $ 4,441,946 | $ 1,385,394 | |
[1] This advance was short term, non-interest bearing and due on demand. The Company collected full amount of advance by March 22, 2023. |
Deposit (Details)
Deposit (Details) ¥ in Millions, $ in Millions | 1 Months Ended | ||||||
Nov. 16, 2020 USD ($) m² | Nov. 16, 2020 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 CNY (¥) | Nov. 16, 2020 CNY (¥) m² | |
Deposit (Details) [Line Items] | |||||||
Deposit | $ 9.9 | ||||||
Second payment | $ 3.4 | ||||||
Memorandum of Understanding [Member] | |||||||
Deposit (Details) [Line Items] | |||||||
Area of square meters | m² | 39,000 | 39,000 | |||||
Total price of MOU | $ 29.6 | ¥ 195 | |||||
Deposit | $ 13.2 | ¥ 87 | $ 13.3 | ¥ 87 | ¥ 65 | ||
Second payment | ¥ | ¥ 22 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 17, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Total building progress (in Shares) | 6,840.41 | |||
Depreciation and amortization expense | $ 340,296 | $ 186,551 | $ 122,409 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of Property and equipment - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | $ 8,457,598 | $ 9,238,795 |
Construction in process | 599,319 | |
Less: accumulated depreciation | (758,044) | (464,522) |
Total | 9,423,713 | 9,904,289 |
Office and electronic equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | 328,305 | 355,937 |
Vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | 765,250 | 744,581 |
Furniture and leasehold improvement [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, Gross | $ 31,285 | $ 29,498 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expenses | $ 333,135 | $ 212,672 | $ 185,865 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of intangible assets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Total | $ 816,885 | $ 1,120,021 |
Less: accumulated amortization | (914,415) | (575,602) |
Artwork trading platform [Member] | ||
Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Total | 797,568 | 793,310 |
Software [Member] | ||
Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Total | 933,732 | 902,313 |
Copyright [Member] | ||
Intangible Assets, Net (Details) - Schedule of intangible assets [Line Items] | ||
Total |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details) - Schedule of future amortization | Dec. 31, 2022 USD ($) |
Schedule of future amortization [Abstract] | |
2023 | $ 320,713 |
2024 | 196,955 |
2025 | 161,581 |
2026 | 136,099 |
2027 | 1,537 |
Total | $ 816,885 |
Other Payables and Accrued Li_3
Other Payables and Accrued Liabilities (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |||
Security deposits returned | $ 314,000 | ||
Revenue deposit | 119,000 | ||
Accrued bonuses payable | $ 789,325 | $ 40,203 | $ 256,000 |
Other Payables and Accrued Li_4
Other Payables and Accrued Liabilities (Details) - Schedule of other payables and accrued liabilities - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of other payables and accrued liabilities [Abstract] | |||
Security deposits payable | [1] | $ 157,961 | $ 172,552 |
Salary payable | [2] | 97,052 | 884,825 |
Others | 35,137 | 226,858 | |
Total | $ 290,150 | $ 1,284,235 | |
[1]The Company signed cooperation agreements with third parties to co-develop a niche market for its online platforms. The Company provides its platforms and users to promote products provided by the third party developers. Revenue generated from the niche markets will be shared between the Company and these parties. These third- party developers also guarantee certain sales volume yearly and the security deposit will be paid to the Company to make up for the sales target shortfalls at the end of the year. Any remaining security deposits will be returned to these parties upon dissolution of the cooperation agreements. The Company returned approximately nil and recognized approximately nil of deposits for target shortfalls as revenue for the years ended December 31, 2022. The Company returned approximately $314,000 and recognized approximately $119,000 of deposits for target shortfalls as revenue for the year ended December 31, 2021. No deposit were returned and no revenue was recognized for the year ended December 31, 2020.[2] During the years ended December 31, 2022, 2021 and 2020, the Company accrued bonuses payable of approximately $40,203, $789,325 and $256,000, respectively. |
Taxes (Details)
Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Taxes (Details) [Line Items] | |||
Income tax rate | 25% | ||
Withholding tax rate | 10% | ||
Statutory rate | 10% | ||
Deferred income tax liabilities (in Dollars) | $ 42,087,930 | $ 34,785,070 | |
Board members voting percentage | 50% | ||
Income tax maturity | 5 years | ||
Tax savings amount (in Dollars) | $ 1,933,000 | $ 4,198,000 | $ 2,427,000 |
Decrease in basic and diluted earnings per shares (in Dollars per share) | $ 0.5 | $ 0.2 | $ 0.16 |
Net operating losses (in Dollars) | $ 4,521,000 | $ 3,786,000 | |
Hong Kong [Member] | |||
Taxes (Details) [Line Items] | |||
Income tax rate | 16.50% | ||
Withholding tax rate | 5% | ||
Foreign Investment Enterprises [Member] | |||
Taxes (Details) [Line Items] | |||
Income tax rate | 25% | ||
PRC [Member] | |||
Taxes (Details) [Line Items] | |||
Withholding tax rate | 10% |
Taxes (Details) - Schedule of e
Taxes (Details) - Schedule of effective tax rate | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Effective Tax Rate Abstract | ||
China income tax rate | 25% | 25% |
Tax exemption/preferential rate reduction | (21.10%) | (21.60%) |
Change in valuation allowance | (3.80%) | (3.40%) |
Effective tax rate | 0.10% |
Taxes (Details) - Schedule of c
Taxes (Details) - Schedule of components of deferred tax assets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule Of Components Of Deferred Tax Assets Abstract | ||
Net operating losses | $ 961,468 | $ 820,610 |
Allowance for doubtful accounts | 10,769 | 27,125 |
Less: valuation allowance | (972,237) | (847,735) |
Deferred tax assets, net |
Taxes (Details) - Schedule of v
Taxes (Details) - Schedule of valuation allowance for deferred tax assets - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Valuation Allowance For Deferred Tax Assets Abstract | ||
Beginning balance | $ 847,735 | $ 452,009 |
Additions | 124,502 | 395,726 |
Ending balance | $ 972,237 | $ 847,735 |
Taxes (Details) - Schedule of t
Taxes (Details) - Schedule of taxes payable - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule Of Taxes Payable Abstract | ||
VAT payable | $ 6,858 | $ 27,077 |
Other taxes payable | 6,514 | 2,749 |
Total | $ 13,372 | $ 29,826 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 | Dec. 31, 2022 CNY (¥) | |
Three Customer [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Customer concentration risk, percentage | 59.30% | |||
Customer Concentration Risk [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Customer concentration risk, percentage | 17.90% | |||
Accounts Receivable [Member] | Three Customer [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Customer concentration risk, percentage | 22.50% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Cash balances (in Dollars) | $ 37,574,000 | |||
Deposits in trust account (in Dollars) | $ 3,421,345 | $ 928,913 | ||
Customer concentration risk, percentage | 30.50% | 30.10% | 65.70% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customers One [Member] | Minimum [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Customer concentration risk, percentage | 28.50% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customers Two [Member] | Maximum [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Customer concentration risk, percentage | 66.60% | |||
Accounts Receivable [Member] | Credit Concentration Risk [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Cash balances (in Dollars) | $ 25,572,000 | |||
PRC [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||
Concentration of Credit Risk (Details) [Line Items] | ||||
Depositor insured | $ 72,000 | ¥ 500,000 |
Concentration of Credit Risk _2
Concentration of Credit Risk (Details) - Schedule of accounts receivable - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Customer A [Member] | ||
Concentration of Credit Risk (Details) - Schedule of accounts receivable [Line Items] | ||
Accounts Receivable | $ 43,075 | $ 47,054 |
Accounts Receivable, Percentage | 59.30% | 28.50% |
Customer B [Member] | ||
Concentration of Credit Risk (Details) - Schedule of accounts receivable [Line Items] | ||
Accounts Receivable | $ 16,345 | |
Accounts Receivable, Percentage | 22.50% | |
Customer C [Member] | ||
Concentration of Credit Risk (Details) - Schedule of accounts receivable [Line Items] | ||
Accounts Receivable | $ 12,966 | |
Accounts Receivable, Percentage | 17.90% | |
Customer D [Member] | ||
Concentration of Credit Risk (Details) - Schedule of accounts receivable [Line Items] | ||
Accounts Receivable | $ 109,792 | |
Accounts Receivable, Percentage | 0% | 66.60% |
Related party transactions (Det
Related party transactions (Details) ¥ in Millions | 6 Months Ended | 12 Months Ended | 24 Months Ended | 32 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 | Dec. 31, 2022 | Mar. 22, 2023 USD ($) | Mar. 22, 2023 CNY (¥) | |
Related party transactions (Details) [Line Items] | ||||||||
Advertising fee | $ 180,000 | |||||||
Actual usage percentage | 1.70% | |||||||
Contract percentage | 2.25% | 1.50% | ||||||
Administration services fees | $ 51,000 | $ 65,000 | $ 54,000 | |||||
Percentage of beneficial shareholder | 11.50% | 11.50% | ||||||
Monthly rental expense | $ 14,000 | |||||||
Total rental expense | $ 151,000 | $ 158,000 | $ 148,000 | |||||
Subsequent Event [Member] | ||||||||
Related party transactions (Details) [Line Items] | ||||||||
Amount returned to the company | $ 900,000 | ¥ 6 | ||||||
Kashi Jinwang Art Purchase E-commerce Co., Ltd [Member] | ||||||||
Related party transactions (Details) [Line Items] | ||||||||
Advertising fee percentage | 1.50% |
Related party transactions (D_2
Related party transactions (Details) - Schedule of accounts receivable – related parties - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related party transactions (Details) - Schedule of accounts receivable – related parties [Line Items] | ||
Total | $ 29,311 | $ 8,093 |
Nanjing Culture Exchange Art Property Exchange Co., Ltd. (“Nanjing Culture”) [Member] | ||
Related party transactions (Details) - Schedule of accounts receivable – related parties [Line Items] | ||
Relationship | Mr. Huajun Gao, the general manager and director of Nanjing Culture, and Mr. Aimin Kong, the vice chairman of Nanjing Culture, each beneficially owns 11.5% shares of the Company | |
Nature | Receivable from technological service fee revenue | |
Total | $ 16,345 | 6,070 |
Jinling Cultural Property Exchange Co., Ltd.(“Jinling Cultural”) [Member] | ||
Related party transactions (Details) - Schedule of accounts receivable – related parties [Line Items] | ||
Relationship | Its major shareholder is also a major shareholder of Jiangsu Yanggu | |
Nature | Receivable from technological service fee revenue | |
Total | $ 12,966 | $ 2,023 |
Related party transactions (D_3
Related party transactions (Details) - Schedule of accounts payable – related parties - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||
Nature | ||
Total | $ 28,727 | $ 1,665 |
Kashi Jinwang Art Purchase E-commerce Co., Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship | 100% owned by Nanjing Jinwang Art Purchase E-commerce Co., Ltd., a related party of the Company | |
Nature | ||
Total | $ 1,665 | |
Zhongcang Warehouse Co., Ltd. [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship | An 18% subsidiary of the VIE of the Company | |
Nature | Payable for storage fees | |
Total | $ 28,727 |
Related party transactions (D_4
Related party transactions (Details) - Schedule of other payables – related parties - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related party transactions (Details) - Schedule of other payables – related parties [Line Items] | ||
Total | $ 3,262 | |
Mun Wah Wan [Member] | ||
Related party transactions (Details) - Schedule of other payables – related parties [Line Items] | ||
Relationship | Chairman of the board of directors of the Company | |
Total | $ 3,262 |
Related party transactions (D_5
Related party transactions (Details) - Schedule of net revenues – related parties - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related party transactions (Details) - Schedule of net revenues – related parties [Line Items] | |||
Total | $ 166,325 | $ 233,157 | $ 213,172 |
Nanjing Culture [Member] | |||
Related party transactions (Details) - Schedule of net revenues – related parties [Line Items] | |||
Relationship | Mr. Huajun Gao, the general manager and director of Nanjing Culture, and Mr. Aimin Kong, the vice chairman of Nanjing Culture, each beneficially owns 11.5% shares of the Company | ||
Nature | Technological service fee revenue | ||
Total | $ 29,934 | 38,959 | 41,571 |
Jinling Cultural [Member] | |||
Related party transactions (Details) - Schedule of net revenues – related parties [Line Items] | |||
Relationship | It is owned by our 11.5% beneficial shareholder, Huajun Gao | ||
Nature | Technological service fee revenue | ||
Total | $ 21,542 | 22,519 | 21,042 |
Hunan Huaqiang Artwork Trading Center Co., Ltd. [Member] | |||
Related party transactions (Details) - Schedule of net revenues – related parties [Line Items] | |||
Relationship | 49% owned by Jinling Cultural | ||
Nature | Technological service fee revenue | ||
Total | $ 17,091 | 21,821 | 20,390 |
Nanjing Jinwang Art Purchase E-commerce Co., Ltd.(“Nanjing Jinwang”) [Member] | |||
Related party transactions (Details) - Schedule of net revenues – related parties [Line Items] | |||
Relationship | It is owned by Huajun Gao and Aimin Kong, each a 11.5% beneficial shareholder of the Company | ||
Nature | Technological service fee revenue | ||
Total | 17,813 | ||
Kashi Jinwang Art Purchase E-commerce Co., Ltd. [Member] | |||
Related party transactions (Details) - Schedule of net revenues – related parties [Line Items] | |||
Relationship | 100% owned by Nanjing Jinwang | ||
Nature | Technological service fee revenue | ||
Total | $ 97,758 | $ 132,045 | $ 130,169 |
Related party transactions (D_6
Related party transactions (Details) - Schedule of cost of revenues – related party - Zhongcang Warehouse Co., Ltd [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related party transactions (Details) - Schedule of cost of revenues – related party [Line Items] | ||
Relationship | An 18% subsidiary of the VIE of the Company | |
Nature | Storage fees | |
Total | $ 304,400 | $ 730,006 |
Related party transactions (D_7
Related party transactions (Details) - Schedule of selling and marketing expenses – related party - Kashi Jinwang Art Purchase E-commerce Co., Ltd [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related party transactions (Details) - Schedule of selling and marketing expenses – related party [Line Items] | ||
Relationship | 100% owned by Nanjing Jinwang | |
Nature | Online advertising expenses | |
Total | $ 43,590 | $ 359,967 |
Equity (Details)
Equity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
Dec. 07, 2021 | Dec. 02, 2020 | Nov. 08, 2019 | Jun. 30, 2022 | Dec. 17, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | May 28, 2020 | Sep. 12, 2019 | |
Equity (Details) [Line Items] | ||||||||||
Authorized ordinary shares | 900,000,000 | 900,000,000 | ||||||||
Authorized preferred shares | 100,000,000 | 100,000,000 | ||||||||
Preferred stock par value (in Dollars per share) | $ 0.00005 | $ 0.00005 | ||||||||
Share split, description | the shareholders of the Company adopted the Second Amended and Restated Articles of Association to effect a 2 for 1 forward share split of the total authorized and issued and outstanding shares of the Company. As a result of the 2 for 1 forward share split, the Company’s total authorized shares are 1,000,000,000 shares comprising of (i) 900,000,000 ordinary shares with a par value of $0.00005 each and (ii) 100,000,000 preferred shares with a par value of $0.00005 each, and the Company’s issued and outstanding ordinary shares increased from 12,400,000 shares to 24,800,000 shares. In addition, all existing shareholders agreed to surrender to the Company as treasury shares, 12.5% of the then outstanding ordinary shares (3,100,000 ordinary shares) for no consideration. | |||||||||
Initial public offering price per share (in Dollars per share) | $ 4 | |||||||||
Ordinary share purchase (in Dollars) | $ 4,000,000 | |||||||||
Ordinary shares par value (in Dollars per share) | $ 0.00005 | $ 0.00005 | ||||||||
Subscription receivable amounted (in Dollars) | $ 1,000,000 | |||||||||
Agreegated shares | 182,280 | |||||||||
Total stock compensation (in Dollars) | $ 464,814 | |||||||||
Equity, fair value adjustment (in Dollars) | $ 557,777 | |||||||||
Price per share of fair value (in Dollars per share) | $ 3.06 | |||||||||
After tax percentage | 10% | |||||||||
Reserve funds interest | 50% | |||||||||
Restricted net assets (in Dollars) | $ 40,620,000 | |||||||||
Ordinary Share [Member] | ||||||||||
Equity (Details) [Line Items] | ||||||||||
Authorized ordinary shares | 50,000,000 | |||||||||
Authorized preferred shares | 50,000,000 | |||||||||
Preferred stock par value (in Dollars per share) | $ 0.0001 | |||||||||
Surrender additional ordinary shares | 6,510,000 | |||||||||
Percentage of outstanding ordinary shares | 30% | |||||||||
Warrant [Member] | ||||||||||
Equity (Details) [Line Items] | ||||||||||
Share issued | 600,000 | |||||||||
Net proceed (in Dollars) | $ 2,000,000 | |||||||||
IPO [Member] | ||||||||||
Equity (Details) [Line Items] | ||||||||||
Initial public offering ordinary shares | 5,065,000 | |||||||||
Initial public option share | 59,400 | |||||||||
Initial Public Offering Price Per value share | 0.00005 | |||||||||
Underwriting expenses (in Dollars) | $ 17,300,000 | |||||||||
Proceeds put into escrow account (in Dollars) | $ 409,952 | |||||||||
Warrant exercise price (in Dollars per share) | $ 5 | |||||||||
Ordinary share purchase (in Dollars) | $ 409,952 | |||||||||
Warrants issuance of ordinary shares | 130,312 | |||||||||
Private Placement [Member] | ||||||||||
Equity (Details) [Line Items] | ||||||||||
Aggregate offering price | 600,000 | |||||||||
Exercise price (in Dollars per share) | $ 6 | |||||||||
Investor [Member] | ||||||||||
Equity (Details) [Line Items] | ||||||||||
Ordinary share purchase (in Dollars) | $ 600,000 | |||||||||
Ordinary shares par value (in Dollars per share) | $ 0.00005 | |||||||||
Price per share (in Dollars per share) | $ 5 | |||||||||
Aggregate offering price | 3,000,000 |
Equity (Details) - Schedule of
Equity (Details) - Schedule of warrants outstanding and exercisable - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of warrants outstanding and exercisable [Abstract] | ||
Warrants outstanding, beginning balance | 600,000 | |
Weighted Average Exercise Price, Warrants outstanding beginning balance | $ 6 | |
Warrants, Issued | 600,000 | |
Weighted Average Exercise Price, Issued | $ 6 | |
Warrants, Exercised | ||
Weighted Average Exercise Price, Exercised | ||
Warrants, Expired | 600,000 | |
Weighted Average Exercise Price, Expired | $ 6 | |
Warrants outstanding, ending balance | 600,000 | |
Weighted Average Exercise Price, Warrants outstanding ending balance | $ 6 | |
Warrants exercisable, ending balance | ||
Weighted Average Exercise Price, Warrants exercisable ending balance |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |||
Jan. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 01, 2022 | |
Commitments and Contingencies (Details) [Line Items] | ||||
Shareholder interest | 11.50% | |||
Short term investment | $ 3,748,900 | $ 16,500,000 | ||
Lease commitment, description | These lease agreements have lease terms expiring between end of June 2022 and July 2024 with a monthly rental of approximately $1,900, $14,000 and $3,900, respectively. | |||
Right of use | $ 34,600 | |||
Rent expense | $ 34,600 | $ 179,552 | $ 186,834 | |
Incremental borrowing rate | 4.75% | |||
Weighted average remaining lease term | 4 years 9 months | |||
Nanjing Jinwang [Member] | ||||
Commitments and Contingencies (Details) [Line Items] | ||||
Short term investment | $ 3,400,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of commitments for minimum lease payment under these operating leases | Dec. 31, 2022 USD ($) |
Schedule Of Commitments For Minimum Lease Payment Under These Operating Leases Abstract | |
2023 | $ 21,027 |
2024 | 11,536 |
Total undiscounted liabilities | 32,563 |
Less: Imputed interest | 264 |
Total lease liabilities | $ 32,299 |
Financial Information of the _3
Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets - Parent [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 14,452,747 | $ 22,086,787 |
Other current asset | 1,324,063 | 491,000 |
Escrow | 600,000 | 600,000 |
Other receivable - intercompany | 3,224,949 | 2,862,436 |
Total current assets | 19,601,759 | 26,040,223 |
OTHER ASSETS | ||
Investment in subsidiary | 39,653,486 | 35,881,493 |
Total other assets | 39,653,486 | 35,881,493 |
Total assets | 59,255,245 | 61,921,716 |
CURRENT LIABILITIES | ||
Accounts payable | 70,000 | 140,000 |
Other payables and accrued liabilities | 23,958 | |
Other payables - intercompany | 9,569,397 | 14,569,398 |
Total current liabilities | 9,639,397 | 14,733,356 |
Total liabilities | 9,639,397 | 14,733,356 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS’ EQUITY | ||
Preferred shares, $0.00005 par value, 100,000,000 shares authorized, no shares issued and outstanding | ||
Ordinary shares, $0.00005 par value, 900,000,000 shares authorized, 30,836,992 and 30,654,712 shares issued, 21,226,992 and 21,044,712 shares outstanding as of December 31, 2022 and 2021, respectively | 1,542 | 1,533 |
Treasury shares, at cost, 9,610,000 shares | (481) | (481) |
Additional paid-in capital | 22,349,767 | 21,884,962 |
Subscription receivable | (1,000,000) | |
Statutory reserves | 124,757 | 112,347 |
Retained earnings | 28,315,319 | 25,092,043 |
Accumulated other comprehensive income (loss) | (1,175,056) | 1,097,956 |
Total shareholders’ equity | 49,615,848 | 47,188,360 |
Total liabilities and shareholders’ equity | $ 59,255,245 | $ 61,921,716 |
Financial Information of the _4
Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets (Parentheticals) - Parent [Member] - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Preferred shares, par value (in Dollars per share) | $ 0.00005 | $ 0.00005 |
Preferred shares, shares authorized | 100,000,000 | 100,000,000 |
Preferred shares, shares issued | ||
Preferred shares, shares outstanding | ||
Ordinary shares, par value (in Dollars per share) | $ 0.00005 | $ 0.00005 |
Ordinary shares, shares authorized | 900,000,000 | 900,000,000 |
Ordinary shares, shares issued | 30,836,992 | 30,654,712 |
Ordinary shares, shares outstanding | 21,226,992 | 21,044,712 |
Treasury shares, at cost | 9,610,000 | 9,610,000 |
Financial Information of the _5
Financial Information of the Parent Company (Details) - Schedule of parent company statements of income and comprehensive income - Parent [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
OPERATING EXPENSES: | |||
General and administrative | $ (2,869,077) | $ (3,501,857) | $ (4,452,154) |
Total operating expenses | (2,869,077) | (3,501,857) | (4,452,154) |
LOSS FROM OPERATIONS | (2,869,077) | 3,501,857 | (4,452,154) |
OTHER INCOME (EXPENSE) | |||
Finance expense | 59,758 | 1,079 | (17,410) |
Other income, net | |||
Share of income of subsidiaries | 6,045,005 | 14,945,051 | 6,517,671 |
Total other income, net | 6,104,763 | 14,946,130 | 6,500,261 |
NET INCOME | 3,235,686 | 11,444,273 | 2,048,107 |
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | (2,273,012) | 174,841 | 1,144,657 |
COMPREHENSIVE INCOME | $ 962,674 | $ 11,619,114 | $ 3,192,764 |
Financial Information of the _6
Financial Information of the Parent Company (Details) - Schedule of parent company statements of cash flows - Parent [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 3,235,686 | $ 11,444,273 | $ 2,048,107 |
Adjustments to reconcile net income to cash used in operating activities: | |||
Equity income of subsidiaries and VIEs | (6,045,005) | (14,945,051) | (6,517,671) |
Depreciation and amortization | |||
(Decrease) increase in accounts payable | (70,000) | (2,820,000) | 2,960,000 |
(Decrease) increase in other payables and accrued liabilities | (23,958) | (517,960) | 50,918 |
(Increase) in other receivable and other current assets | (833,063) | ||
(Increase) in other receivable - intercompany | (362,514) | (2,862,437) | |
Increase (decrease) in other payables - intercompany | (5,000,000) | 13,174,933 | (18,993) |
Common stock issue for service | 464,814 | ||
Net cash used in operating activities | (8,634,040) | 3,473,758 | (1,477,639) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of intangible assets | |||
Net cash used in investing activities | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from sale of ordinary shares, net | 1,000,000 | 2,000,000 | 18,090,668 |
Net cash provided by financing activities | 1,000,000 | 2,000,000 | 18,090,668 |
CHANGES IN CASH AND CASH EQUIVALENTS | (7,634,040) | 5,473,758 | 16,613,029 |
CASH AND CASH EQUIVALENTS, beginning of year | 22,086,787 | 16,613,029 | |
CASH AND CASH EQUIVALENTS, end of year | 14,452,747 | 22,086,787 | 16,613,029 |
Business acquisition through issuance of ordinary shares | |||
Proceeds from initial public offerings deposited with escrow | 600,000 | ||
Proceeds from initial public offerings offset with intercompany payable | $ 1,413,458 |