Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information Line Items | |
Entity Registrant Name | Hongli Group Inc. |
Trading Symbol | HLP |
Document Type | 20-F |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 10,000,000 |
Amendment Flag | false |
Entity Central Index Key | 0001855557 |
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 | 001-41671 |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | Beisanli Street |
Entity Address, Address Line Two | Economic Development ZoneChangle County |
Entity Address, City or Town | WeifangShandong |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 262400 |
Title of 12(b) Security | Ordinary shares, par value $0.0001 |
Security Exchange Name | NASDAQ |
Entity Interactive Data Current | Yes |
Document Accounting Standard | U.S. GAAP |
Auditor Firm ID | 587 |
Auditor Name | RBSM LLP |
Auditor Location | New York, New York |
Business Contact | |
Document Information Line Items | |
Entity Address, Address Line One | Beisanli Street |
Entity Address, Address Line Two | Economic Development ZoneChangle County |
Entity Address, City or Town | WeifangShandong |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 262400 |
Contact Personnel Name | Jie Liu |
City Area Code | +86 |
Local Phone Number | 0535-2180886 |
Contact Personnel Email Address | zongjingban@hongli-profile.com |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Current assets: | |||
Cash and cash equivalent | $ 2,085,033 | $ 484,389 | |
Restricted cash | 29,006 | 47,073 | |
Accounts receivable | 7,429,904 | 5,009,547 | |
Notes receivable | 302,775 | 892,507 | |
Inventories, net | 2,613,549 | 2,967,987 | |
Due from a related party | 1,503 | ||
Prepaid expense and other current assets | 1,604,134 | 1,995,007 | |
Total current assets | 14,064,401 | 11,398,013 | |
Non-current assets | |||
Property, plant and equipment, net | 12,300,491 | 4,623,153 | |
Prepayment for purchase of Yingxuan Assets | 3,535,975 | 3,640,859 | |
Intangible assets, net | 4,961,881 | 722,359 | |
Finance lease right-of-use assets, net | 1,299,217 | 1,372,169 | |
Other non-current assets | 2,174 | 89,193 | |
TOTAL ASSETS | 36,164,139 | 21,845,746 | |
Current liabilities | |||
Short-term loans | 6,015,975 | 5,655,019 | |
Accounts payable | 2,957,110 | 2,447,982 | |
Security deposit received for sales of properties | 1,449,633 | ||
Due to related parties | 607,236 | 120,980 | |
Income tax payable | 136,544 | 119,958 | |
Finance lease obligation, current | 315,780 | 533,808 | |
Accrued expenses and other payables | 955,676 | 808,474 | |
Total current liabilities | 12,437,954 | 9,686,221 | |
Long-term loans | 10,147,428 | ||
Long-term payable | 42,220 | 378,799 | |
Finance lease obligation, non-current | 46,623 | 292,130 | |
Deferred tax liability | 15,221 | ||
TOTAL LIABILITIES | 22,689,446 | 10,357,150 | |
SHAREHOLDERS’ EQUITY: | |||
Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 10,000,000 shares issued and outstanding as of December 31, 2022 and 2021 | [1] | 1,000 | 1,000 |
Additional paid-in capital | 609,601 | 609,601 | |
Statutory reserve | 370,683 | 370,683 | |
Retained earnings | 12,740,983 | 9,808,620 | |
Accumulated other comprehensive income (loss) | (247,574) | 698,692 | |
TOTAL SHAREHOLDERS’ EQUITY | 13,474,693 | 11,488,596 | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 36,164,139 | $ 21,845,746 | |
[1]The share amounts are presented on a retroactive basis. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Ordinary shares, shares authorized | 500,000,000 | 500,000,000 |
Ordinary shares, shares issued | 10,000,000 | 10,000,000 |
Ordinary shares, shares outstanding | 10,000,000 | 10,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Income Statement [Abstract] | ||||
Revenues, net | $ 20,283,245 | $ 21,713,138 | $ 11,158,820 | |
Cost of revenues | 13,274,752 | 14,058,830 | 6,706,303 | |
Gross Profit | 7,008,493 | 7,654,308 | 4,452,517 | |
Operating expenses: | ||||
Selling, general and administrative expenses | 4,087,171 | 3,718,897 | 1,983,013 | |
Total operating expenses | 4,087,171 | 3,718,897 | 1,983,013 | |
Income from operations | 2,921,322 | 3,935,411 | 2,469,504 | |
Other income (expense) | ||||
Other income | 601,071 | 69,466 | 643,775 | |
Financing expenses | (244,005) | (537,521) | (372,546) | |
Other expenses | (65,956) | (2,064) | (77,296) | |
Total other income (expenses), net | 291,110 | (470,119) | 193,933 | |
Income before income taxes | 3,212,432 | 3,465,292 | 2,663,437 | |
Income tax expense | 280,069 | 263,080 | 239,496 | |
Net income | 2,932,363 | 3,202,212 | 2,423,941 | |
Comprehensive income | ||||
Net income | 2,932,363 | 3,202,212 | 2,423,941 | |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | (946,266) | 247,004 | 467,994 | |
Comprehensive income | $ 1,986,097 | $ 3,449,216 | $ 2,891,935 | |
Earnings per share | ||||
Basic and diluted (in Dollars per share) | $ 0.29 | $ 0.32 | $ 0.24 | |
Weighted average common shares outstanding* | ||||
Basic and diluted (in Shares) | [1] | 10,000,000 | 10,000,000 | 10,000,000 |
[1]The share amounts are presented on a retroactive basis. |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Income (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Earnings per share, Diluted | $ 0.29 | $ 0.32 | $ 0.24 |
Weighted average common shares outstanding, Diluted | 10,000,000 | 10,000,000 | 10,000,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders’ Equity - USD ($) | Ordinary Shares | Additional paid-in capital | Statutory reserve | Retained earnings | Accumulated other comprehensive income (loss) | Total | ||
Balance at Dec. 31, 2019 | $ 1,000 | [1] | $ 609,601 | $ 370,683 | $ 4,182,467 | $ (16,306) | $ 5,147,445 | |
Balance (in Shares) at Dec. 31, 2019 | [1] | 10,000,000 | ||||||
Net income | 2,423,941 | 2,423,941 | ||||||
Foreign currency translation adjustment | 467,994 | 467,994 | ||||||
Balance at Dec. 31, 2020 | $ 1,000 | [1] | 609,601 | 370,683 | 6,606,408 | 451,688 | 8,039,380 | |
Balance (in Shares) at Dec. 31, 2020 | [1] | 10,000,000 | ||||||
Net income | 3,202,212 | 3,202,212 | ||||||
Foreign currency translation adjustment | 247,004 | 247,004 | ||||||
Balance at Dec. 31, 2021 | $ 1,000 | [1] | 609,601 | 370,683 | 9,808,620 | 698,692 | 11,488,596 | |
Balance (in Shares) at Dec. 31, 2021 | [1] | 10,000,000 | ||||||
Net income | 2,932,363 | 2,932,363 | ||||||
Foreign currency translation adjustment | (946,266) | (946,266) | ||||||
Balance at Dec. 31, 2022 | $ 1,000 | [1] | $ 609,601 | $ 370,683 | $ 12,740,983 | $ (247,574) | $ 13,474,693 | |
Balance (in Shares) at Dec. 31, 2022 | [1] | 10,000,000 | ||||||
[1] The share amounts are presented on a retroactive basis. |
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 | $ 2,932,363 | $ 3,202,212 | $ 2,423,941 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 644,668 | 585,835 | 520,685 |
Accounts receivable written off | 7,296 | ||
Amortization of operating lease right-of-use assets | 10,744 | 115,954 | 162,611 |
Loss on disposals of property and equipment | 77,203 | ||
Reversal of inventory write-down | (3,011) | ||
Deferred tax provision | 15,602 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (2,879,161) | (1,842,182) | (619,950) |
Notes receivable | 534,838 | (308,166) | 675,379 |
Inventories | 131,687 | (1,461,782) | (445,420) |
Prepaid expense and other current assets | 165,028 | (680,924) | (36,990) |
Other non-current assets | 82,236 | 107,242 | (139,380) |
Due from related parties | 1,482 | (1,485) | (52,871) |
Due to related parties | 20,726 | (57,379) | 13,295 |
Accounts payable | 523,898 | 1,402,786 | 387,514 |
Accrued expenses and other payables | 255,432 | 141,578 | 76,433 |
Income tax payable | 46,185 | (61,030) | (63,364) |
Net cash provided by operating activities | 2,493,024 | 1,139,648 | 2,979,086 |
Cash flows from investing activities | |||
Purchase of property and equipment | (5,100,448) | (1,004,666) | (584,613) |
Purchase of intangible assets | (4,431,596) | ||
Prepayments for purchase of Yingxuan Assets | (3,624,454) | (2,046,682) | (1,449,212) |
Security deposit received for sales of properties | 1,485,906 | ||
Proceeds from sale of property and equipment | 21,961 | ||
Loans made to third parties | (206,784) | ||
Repayments of loans from third parties | 206,784 | ||
Loans made to related parties | (904,328) | ||
Repayment of loans from related parties | 904,328 | ||
Net cash used in investing activities | (11,670,592) | (3,051,348) | (2,011,864) |
Cash flows from financing activities | |||
Proceeds from financing liabilities | 135,217 | 503,782 | |
Payments for financing liabilities | (278,320) | (93,076) | (73,032) |
Payments for finance leases | (581,549) | (770,242) | (119,014) |
Advances from related parties | 1,640,143 | 5,423,445 | |
Repayments to related parties | (1,153,063) | (4,971,887) | |
Payments of deferred offering costs | (133,854) | (368,409) | (214,366) |
Borrowings from short term loans | 6,689,550 | 5,943,080 | 3,827,396 |
Repayments of short term loans | (5,878,245) | (4,231,771) | (3,764,329) |
Borrowings from long term loans | 10,401,343 | ||
Net cash provided by financing activities | 10,841,222 | 983,364 | 108,213 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (81,077) | 25,689 | 77,830 |
Net change in cash, cash equivalents and restricted cash | 1,582,577 | (902,647) | 1,153,265 |
Cash, cash equivalents and restricted cash, beginning of the year | 531,462 | 1,434,109 | 280,844 |
Cash, cash equivalents and restricted cash, end of the year | 2,114,039 | 531,462 | 1,434,109 |
Reconciliation of cash, cash equivalents and restricted cash, beginning of the year | |||
Cash, cash equivalents | 484,389 | 1,434,109 | 280,844 |
Restricted cash | 47,073 | ||
Cash, cash equivalents and restricted cash, beginning of the year | 531,462 | 1,434,109 | 280,844 |
Reconciliation of cash, cash equivalents and restricted cash, end of the year | |||
Cash, cash equivalents | 2,085,033 | 484,389 | 1,434,109 |
Restricted cash | 29,006 | 47,073 | |
Cash, cash equivalents and restricted cash, end of the year | 2,114,039 | 531,462 | 1,434,109 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest expense | 371,214 | 313,679 | 258,238 |
Cash paid for income taxes | 72,524 | 324,111 | 302,860 |
Non-cash investing and financing activities | |||
Right-of-use assets obtained in exchange for lease obligations | 151,048 | 1,355,557 | |
Right-of-use assets transfer to Property and equipment upon exercise of purchase option | 107,998 | ||
Property and equipment acquired on credit as liabilities | 189,010 | 52,163 | 36,218 |
Property and equipment acquired by prepayments for purchase of Yingxuan Assets | 3,447,831 | 63,019 | |
Purchase of inventories by a related party on behalf of the Company | 21,882 | ||
Security deposits applied to lease payments | 22,872 | 15,616 | |
Proceeds of finance liabilities deducted by security deposits | 171,047 | ||
Security deposits applied to payments of long-term payable | $ 86,788 | $ 34,236 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 — ORGANIZATION AND NATURE OF OPERATIONS Hongli Group Inc. (“Hongli Cayman”) was incorporated in Cayman Islands as an exempted company with limited liability on February 9, 2021. Hongli Cayman serves as a holding company and conducts its businesses through its subsidiaries and the consolidated variable interest entity (the “VIE”) and the subsidiaries of the VIE. Hongli Cayman, its subsidiaries, the VIE and the subsidiaries of the VIE are collectively referred to herein as the “Company”, “we”, “our”, “us” or “Hongli Group”, unless specific reference is made to an entity. The Company is engaged in a business in providing solutions, including the manufacturing and selling of customized metal profiles in the People’s Republic of China (“PRC” or “China”). The Company’s on-going research and development, customer support and continuous quality control help its customers remain competitive. The Company includes the following subsidiaries and the consolidated VIE and the subsidiaries of the VIE in the consolidated financial statements as if the current corporate structure (“restructuring” or “reorganization”) had been in existence throughout the periods presented (see “Reorganization under common control through VIE structure” below): Name Date of Organization Place of Organization Subsidiaries Hongli Hong Kong Limited (“Hongli HK”) March 5, 2021 Hong Kong SAR Shandong Xiangfeng Heavy Industry Co., Ltd. (“WFOE”) April 8, 2021 People’s Republic of China (“PRC”) VIE and Its Subsidiaries Shandong Hongli Special Section Tube Co., Ltd., (“Hongli Shandong”) September 13, 1999 PRC Shandong Maituo Heavy Industry Co., Ltd. (“Maituo”) (1) May 23, 2019 PRC Shandong Haozhen Heavy Industry Co., Ltd. (“Haozhen Shandong”) (2) September 18, 2020 PRC (1) Wholly owned subsidiary of Hongli Shandong (2) Haozhen Shandong is jointly established by Hongli Shandong and Sungda Tech Co., Ltd., a 30% owner of Haozhen Shandong Reorganization under common control through VIE structure The Company does not conduct any substantive operations of its own, rather, it conducts its primary business operations through WFOE, which in turn, conducts its business substantially through Hongli Shandong. Effective power to direct activities of Hongli Shandong was transferred to the Company through the series of contractual arrangements without transferring legal ownership in Hongli Shandong (“restructuring” or “reorganization”). Neither the Company nor any of its subsidiaries have any equity ownership in the VIE and the subsidiaries of VIE. As a result of these contractual arrangements and for accounting reporting purposes, the Company is able to consolidate the financial results of Hongli Shandong and its subsidiaries through WFOE, as the primary beneficiary in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Under the laws and regulations of the PRC, foreign persons and foreign companies are restricted from investing directly in certain businesses within the PRC. Though the business of the PRC operating entities is not within any sensitive sector that PRC law prohibits direct foreign investment in, to avoid the substantial costs and time for regulatory approval to convert the PRC operating entities into wholly foreign owned entities, on April 12, 2021, Hongli Shandong and its shareholders entered into a series of contractual arrangements with WFOE which allows WFOE, the primary beneficiary of the VIE for accounting reporting purposes in accordance with U.S. GAAP, to consolidate the financial results of Hongli Shandong and its subsidiaries. Agreements that Consolidate the Financial Results of the VIE Hongli Shandong entered into an exclusive business cooperation and management agreement with WFOE, pursuant to which the WFOE will provide a series of consulting and technical support services to Hongli Shandong and are entitled to consolidate the financial results of Hongli Shandong. The service fee is paid annually. The term of this agreement shall be continuously effective unless mutually terminated by both parties in writing. Hongli Shandong shall not accept any similar consultations and/or services provided by any third party and shall not establish similar corporation relationship with any third party regarding the matters contemplated in the agreement without a written consent from WFOE. Agreements that Provide Effective Power to Direct Activities of VIE WFOE entered into an equity interest pledge agreement with Hongli Shandong’s shareholders, who pledged all their equity interests in these entities to WFOE. The equity interest pledge agreement, which was entered into by Hongli Shandong’s shareholders, pledged their equity interests in WFOE as a guarantee for the payment and performance under the exclusive business cooperation and management agreement by Hongli Shandong. WFOE is entitled to certain rights, including the right to sell the pledged equity interests. Pursuant to the equity interest pledge agreement, the shareholders of Hongli Shandong cannot transfer, sell, pledge, dispose of or otherwise create any new encumbrance on their respective equity interest in Hongli Shandong without the prior written consent from WFOE. The equity pledge right will expire upon the termination of the exclusive business cooperation and management agreement between WFOE and Hongli Shandong and a full settlement of service fees related therewith. The equity pledges of Hongli Shandong have been registered with the relevant local branch of the State Administration for Industry and Commerce, or SAIC. WFOE also entered into an exclusive option purchase agreement with Hongli Shandong’s shareholders. Pursuant to the agreement, the shareholders have granted an irrevocable and unconditional option to WFOE their designees to acquire all or part of such shareholders’ equity interests in Hongli Shandong at its sole discretion, to the extent as permitted by PRC laws and regulations then in effect. The consideration for such acquisition will be equal to the registered capital of Hongli Shandong, and if PRC law requires the consideration to be greater than the registered capital, the consideration will be the minimum amount as permitted by PRC law. The term of this agreement is valid for ten years upon execution of the agreement and may be extended for an additional ten years at WFOE’s election. Risks in relation to the VIE structure The Company believes that the contractual arrangements between WFOE and Hongli Shandong are in compliance with the PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangements and the interests of the shareholders of Hongli Shandong may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing Hongli Shandong not to pay the service fees when required to do so. Hongli Cayman’s ability to direct the activities of Hongli Shandong also depends on the power of attorney WFOE has to vote on all matters requiring shareholders’ approval in Hongli Shandong. As noted above, the Company believes this power of attorney is legally enforceable but may not be as effective as direct equity ownership. In addition, if the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, the Company may be subject to fines or other actions. The Company does not believe such actions would result in the liquidation or dissolution of the Company, WFOE or Hongli Shandong. Hongli Cayman, through its subsidiaries, its WFOE and through the contractual arrangements, has (1) the power to direct the activities of Hongli Shandong and its subsidiaries that most significantly affect the VIE and its subsidiaries’ economic performance, and (2) the obligation to absorb losses, or the right to receive benefits from Hongli Shandong and its subsidiaries that could be significant to the VIE and subsidiaries. Accordingly, the Company, through WFOE in which is the primary beneficiary of Hongli Shandong and its subsidiaries for accounting reporting purposes, and has consolidated the financial results of Hongli Shandong and its subsidiaries in accordance with U.S. GAAP. The accompanying consolidated financial statements present the historical financial position, results of operations and cash flows of Hongli Shandong and its subsidiaries and adjusted for the effects of the corporate restructure as disclosed per above. Accordingly, the accompanying consolidated financial statements have been prepared as if the reorganization had been in existence throughout the periods presented (see Note 16 for the 100 ordinary shares of Hongli Cayman issued on February 9, 2021 in connection with the reorganization and anticipation of the initial public offering (“IPO”) of the Company’s equity security). As of December 31, 2022 and 2021, the Company did not record any asset or liability relating to Hongli Cayman, Hongli HK and WFOE as these entities were incorporated in the year 2021 with minimal activities. The following consolidated financial information of the VIE and VIE’s subsidiaries as a whole as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 were included in the accompanying consolidated financial statements of the Company. Transactions between VIE and VIE’s subsidiaries are eliminated in the financial information presented below: As of December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 2,085,033 $ 484,389 Restricted cash 29,006 47,073 Accounts receivable 7,429,904 5,009,547 Notes receivable 302,775 892,507 Inventories, net 2,613,549 2,967,987 Due from a related party - 1,503 Prepaid expense and other current assets 1,604,134 1,995,007 Total current assets 14,064,401 11,398,013 Non-current assets Property, plant and equipment, net 12,300,491 4,623,153 Prepayment for purchase of Yingxuan Assets 3,535,975 3,640,859 Intangible assets, net 4,961,881 722,359 Finance lease right-of-use assets, net 1,299,217 1,372,169 Other non-current assets 2,174 89,193 TOTAL ASSETS $ 36,164,139 $ 21,845,746 Net Assets $ 13,474,693 $ 11,488,596 LIABILITIES Current liabilities Short-term loans $ 6,015,975 $ 5,655,019 Accounts payable 2,957,110 2,447,982 Security deposit received for sales of properties 1,449,633 - Due to related parties 607,236 120,980 Income tax payable 136,544 119,958 Finance lease obligation, current 315,780 533,808 Accrued expenses and other payables 955,676 808,474 Total current liabilities 12,437,954 9,686,221 Long-term loans 10,147,428 - Long-term payable 42,220 378,799 Finance lease obligation, non-current 46,623 292,130 Deferred tax liability 15,221 - TOTAL LIABILITIES $ 22,689,446 $ 10,357,150 For the Years Ended December 31, 2022 2021 2020 Revenues, net $ 20,283,245 $ 21,713,138 $ 11,158,820 Gross profit $ 7,008,493 $ 7,654,308 $ 4,452,517 Income from operations $ 2,921,322 $ 3,935,411 $ 2,469,504 Net income $ 2,932,363 $ 3,202,212 $ 2,423,941 The revenue-producing assets held by VIE and VIE’s subsidiaries comprise mainly of property, plant and equipment, and intangible assets that consist of land use rights. The VIE and VIE’s subsidiaries contributed an aggregate of 100% of the Company’s consolidated revenues for the years ended December 31, 2022, 2021 and 2020. Initial Public Offering On March 31, 2023, the Company closed its initial public offering (the “Offering”) of 2,062,500 ordinary shares (the “Ordinary Shares”) at a public offering price of $4.00 per share for total gross proceeds of $8.25 million before deducting underwriting discounts and offering expenses. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 309,375 Ordinary Shares at the public offering price. On May 2, 2023, the underwriter exercised the over-allotment option in full for total gross proceeds of $1,237,500 before deducting underwriting discounts and commissions. The Company’s Ordinary Shares began trading on the Nasdaq Capital Market under the symbol “HLP” on March 29, 2023. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the rules and regulations of the U.S. Securities Exchange Commission (“SEC”). Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation. Noncontrolling Interest Noncontrolling interest on the consolidated balance sheets results from the consolidation of Haozhen, a 70% owned subsidiary starting from September 18, 2020. For the years ended December 31, 2022, 2021 and 2020, Haozhen did not commence any operation and the portion of the income or loss applicable to the noncontrolling interest in subsidiary for the years ended December 31, 2022, 2021 and 2020 is nil. Use of Estimates In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventory write-down, useful lives of property, plant and equipment and intangible assets, valuation allowance of deferred tax assets. Actual results could differ from those estimates. Related Parties Transactions A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows may not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss) included in consolidated balance sheets and statements of changes in shareholders’ equity. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates with any transaction gain and or losses are included in the results of operations as incurred. Gain (loss) from foreign currency transactions recognized and included in the consolidated statements of operations and comprehensive income for the years ended December 31, 2022, 2021 and 2020, amounted to approximately $197,000, $(43,000) and $(102,000), respectively. The value of RMB against U.S. Dollar may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s consolidated financial condition in terms of reporting. The following table outlines the currency exchange rates that were used in the consolidated financial statements: December 31, December 31, December 31, Year-end spot rate US$1 = 6.8983 RMB US$1 = 6.3731 RMB US$1 = 6.5378 RMB Average rate US$1 = 6.7299 RMB US$1 = 6.4512 RMB US$1 = 6.9003 RMB Fair Value Measurement The fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, time deposits, accounts receivable, and other current assets, accounts payable, short-term bank borrowings and other current liabilities, approximate their fair values because of the short maturity of these instruments and market rates of interest. ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — Quoted prices in active markets for identical assets and liabilities. ● Level 2 — Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash and cash equivalents, notes receivable, accounts receivable, net, inventories, net, prepaid expense and other current assets, accounts payables, income tax payable, accrued expenses and other current liabilities and short-term loans approximate the fair value of the respective assets and liabilities as of December 31, 2022 and 2021 owing to their short-term or present value nature or present value of the assets and liabilities. Earnings per Share Under the provisions of ASC 260, “Earnings Per Share”, basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of ordinary shares outstanding for the periods presented. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary shares that would then share in the income of the company, subject to anti-dilution limitations. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash accounts, interest-bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of the bank accounts in the PRC. Restricted Cash Restricted cash consists of cash deposited with the PRC bank and used as collateral to secure the Company’s note receivable payments. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires entities to present the aggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flows will be required to present restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents. The Company adopted the updated guidance and presented restricted cash within the ending cash, cash equivalents, and restricted cash balance on the Company’s consolidated statement of cash flows for the periods presented. Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management’s review of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts, when account receivables are deemed uncollectible, after all means of collection efforts have been exhausted and the potential for recovery is considered remote. The Company has written off an account receivable balance of $7,296 and $ nil Inventories, Net Inventories are stated at the lower of cost or net realizable value. Cost is determined on the weighted average basis. Work-in-progress inventories consist of raw materials, direct labor and overhead associated with the manufacturing process. Finished goods included inventory finished in the Company’s own warehouse and goods in transit, which has not met the criteria of revenue recognition. The Company periodically assesses the recoverability of all inventories to determine whether adjustments are required to record inventories at the lower of cost or net realizable value. Inventories that the Company determines to be obsolete or in excess of forecasted usage are reduced to its estimated realizable value based on assumptions about future demand and market conditions. A write down of potentially obsolete or slow-moving inventory is recorded based on management’s analysis of inventory levels. Deferred Offering Costs Deferred offering costs consist principally of all direct offering costs incurred by the Company, such as underwriting, legal, accounting, consulting, printing, and other registration related costs in connection with the initial public offering (“IPO”) of the Company’s ordinary shares. Such costs are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds. In the event the offering is unsuccessful or aborted, the costs will be expensed. Property, Plant and Equipment, Net Property, plant 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 a 5% residual value. The estimated useful lives are as follows: Useful Lives Buildings 30 Years Machinery equipment 10 Years Vehicles 4 – 5 Years Office equipment 5 Years Tools 3 – 5 Years Electronic devices 3 – 5 Years 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 operations and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation and amortization to determine whether subsequent events and circumstances indicate a change in estimates of useful lives. Intangible Assets, Net Intangible assets are stated at cost, less accumulated amortization. Amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets. All land in the PRC is owned by the government; however, the government grants “land use rights.” The Company has obtained rights to use various parcels of land for between 42 and 46 years. The Company amortizes the cost of the land use rights over their useful life using the straight-line method. Impairment for Long-Lived Assets Long-lived assets, including property, plant and equipment and intangible 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 assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted 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 would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. There was no impairment of long-lived assets recognized for the years ended December 31, 2022, 2021 and 2020, respectively. Lease Commitments The Company has adopted the new lease standard, ASC 842, Leases (Topic 842) for all periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC Topic 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheets for any new or existing lease arrangements with lease terms of twelve months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. In addition, the Company elected the land easement transition practical expedient and did not reassess whether an existing or expired land easement is a lease or contains a lease if it has not historically been accounted for as a lease. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes optional renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. In cases of sale and leaseback transactions, if the transfer of the asset to the lessor does not qualify as a sale, then the transaction constitutes a failed sale and leaseback and is accounted for as a financing transaction. For a sale to have occurred, the control of the asset would need to be transferred to the lessor, and the lessor would need to obtain substantially all the benefits from the use of the asset. The Company has entered into a sale and leaseback transaction which qualified as failed sale and leaseback transaction as the Company has a purchase obligation to acquire the machinery at the end of the lease term. The asset has been included in the property, plant and equipment, and the amortization is computed based on the shorter of the financing terms or the estimated useful life. Revenue Recognition The Company has adopted the new revenue standard, ASC 606, Revenue from Contracts with Customers (Topic 606) for all periods presented. Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods, in an amount that reflects the consideration which the Company expects to receive in exchange for the goods. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies a performance obligation. The Company applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. Revenue is recognized net of value-added tax. The Company’s revenue is principally derived from sales of products in domestic and overseas markets. Revenue is recognized at the point in time when the performance obligation has been satisfied and control of the products have been transferred to the customers, which generally occurs upon shipment for overseas customers and acceptance for domestic customers based on the terms of the sales contracts. Revenue is measured by the transaction price, which is defined as the amount of consideration the Company expects to receive in exchange for selling products to customers. The Company does not offer or agree on terms that result in variable consideration during the periods presented. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time is required before payments are due. The Company does not grant payment terms greater than one year. Additionally, the Company does not offer promotional payments, customer coupons, rebates or other cash redemptions offers to its customers. The Company does not have any contract asset. Contract liabilities are recorded when consideration is received from a customer prior to transferring the control of goods to the customer or other conditions under the terms of a sales contract. As of December 31, 2022 and 2021, the Company recorded contract liabilities, included in accrued expenses and other payables, of $57,906 and $169,087, respectively. The Company recognized $124,687, $16,127 and $36,026 of beginning contract liabilities as revenue for the years ended December 31, 2022, 2021 and 2020, respectively. The Company is expected to recognize the December 31, 2022’s ending contract liabilities of $57,906 during the year ended December 31, 2023 as revenues. The Company’s net revenue segregated by geographic regions is as follows: For the Years Ended December 31, 2022 2021 2020 PRC $ 15,285,549 $ 16,844,113 $ 7,860,794 Overseas 4,997,696 4,869,025 3,298,026 Total $ 20,283,245 $ 21,713,138 $ 11,158,820 Value Added Tax Hongli Shandong and its subsidiaries are subject to a VAT of 13% for its business practice. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of the product sold. The Company reports revenue net of PRC’s VAT for all the periods presented on the consolidated statements of operations and comprehensive income. Cost of Revenues Amounts recorded as cost of revenue relate to direct expenses incurred in order to generate revenue. Such costs are recorded as incurred. Cost of revenues consists of product costs, including costs of raw material, contract manufacturers for production, shipping and handling costs, manufacturing and tooling equipment depreciation. Research and Development Expenses Research and development expenses consist primarily of salary and welfare for research and development personnel, consulting and contractor expenses, testing and tooling materials and other expenses in associated with research and development personnel. The Company recognizes research and development expenses as expense when incurred. Research and development expenses were $1,412,355, $1,466,682 and $643,958 for the years ended December 31, 2022, 2021 and 2020, respectively. Sales and Marketing Expenses Sales and marketing expenses consist primarily of salary and welfare for sales and marketing personnel, promotion and marketing expenses and other expenses in associated with sales and marketing personnel. The Company recognized $596,620, $641,778 and $291,534 of sales and marketing expenses for the years ended December 31, 2022, 2021 and 2020, respectively. Income Taxes The Company follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence; it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in the tax rate. The Company accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of operations and comprehensive income as income tax expense. No such expenses incurred during the years ended December 31, 2022, 2021 and 2020. Government Subsidy Government grants include cash subsidies as well as other subsidies received from various government agencies by the subsidiaries of the Company. Such subsidies are generally provided as incentives from the local government to encourage the expansion of local business. The government grant is recognized in the consolidated statements of income and comprehensive income when the relevant performance criteria specified in the grant are met, for instance, locating contact centers in their jurisdictions or helping local employment needs. The government subsidy granted to the Company was $37,740, $18,214 and $530,410 for the years ended December 31, 2022, 2021 and 2020, respectively and included in other income in the consolidated statements of operations and comprehensive income. Statutory Reserves The Company’s PRC subsidiaries are required to make appropriations to certain non-distributable reserve funds. In accordance with China’s Company Laws, the Company’s PRC subsidiary that are Chinese companies, must make appropriations from their after-tax profit (as determined under the Accounting Standards for Business Enterprises as promulgated by the Ministry of Finance of the People’s Republic of China (“PRC GAAP”)) to non-distributable reserve funds including (i) statutory surplus fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the respective company. Appropriation to the discretionary surplus fund is made at the discretion of the respective company. Pursuant to the laws applicable to China’s Foreign Investment Enterprises, the Company’s subsidiaries that are foreign investment enterprises in China have to make appropriations from their after-tax profit (as determined under PRC GAAP) to reserve funds including (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the respective company. Appropriations to the other two reserve funds are at the respective company’s discretion. The use of the general reserve fund, statutory surplus fund and discretionary surplus fund are restricted to the offsetting of losses to increase the registered capital of the respective company. These reserves are not allowed to be transferred out as cash dividends, loans or advances, nor can they be distributed except under liquidation. Comprehensive Income Comprehensive income is comprised of net income and all changes to the statements of shareholders’ equity, except those due to investments by shareholders, changes in paid-in capital and distributions to shareholders. For the Company, comprehensive income for the years ended December 31, 2022, 2021 and 2020 consisted of net income and unrealized gain (loss) from foreign currency translation adjustment. Segment Reporting The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment. Recently Issued Accounting Pronouncements The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued and assesses the impacts on the Company’s consolidated financial position and/or results of operations. In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments (Topic 326)”, and issued subsequent amendments to the initial guidance, transitional guidance and other interpretive guidance between November 2018 and March 2020 within ASU2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03. ASU 2016-13 introduces new guidance for credit losses on instruments within its scope, which significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life, instead of when incurred. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt this ASU through a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company has adopted this ASU starting January 1, 2020. The adoption did not pose material impact to the Company’s financial presentation. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The ASU is effective for fiscal years beginning after December 15, 2020 and will be applied either retrospectively or prospectively based upon the applicable amendments. Early adoption is permitted. The Company has adopted this ASU starting January 1, 2021. The adoption did not pose material impact to the Company’s financial presentation. The Company does not believe other recently issued but not yet effective accounting standards would have a material effect on its consolidated financial position, statements of operations and cash flows. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3 — ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: As of December 31, 2022 2021 Accounts receivable, gross $ 7,429,904 $ 5,009,547 Less: allowance for doubtful accounts - - Accounts receivable, net $ 7,429,904 $ 5,009,547 As of December 31, 2022, accounts receivable due from Weichai LOVOL Heavy Industry Co. Ltd (“LOVOL”) recorded at approximately RMB13.5 million (or $2.0 million), was pledged as collaterals to secure the factoring loan with recourse with Shandong Heavy Industry Finance (see Note 9). |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 31, 2022 | |
Notes Receivable [Abstract] | |
NOTES RECEIVABLE | NOTE 4 — NOTES RECEIVABLE Notes receivable consisted of the following bank acceptance notes: As of December 31, 2022 2021 Due in the first quarter of 2022 $ - $ 49,378 Due in the second quarter of 2022 - 761,537 Due in the third quarter of 2022 - 81,592 Due in the first quarter of 2023 116,280 - Due in the second quarter of 2023 94,589 - Due in the third quarter of 2023 91,906 - Total $ 302,775 $ 892,507 Notes receivable are received from customers for the purchase of the Company’s products and are issued by financial institutions that entitle the Company to receive the full-face amounts from the financial institution at maturity, which bears no interest and generally ranges from six to twelve months from the date of issuance. |
Inventories, Net
Inventories, Net | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | NOTE 5 — INVENTORIES, NET Inventories, net consisted of the following: As of December 31, 2022 2021 Raw materials $ 896,766 $ 664,329 Work in progress 1,324,655 1,956,206 Finished goods 399,022 354,914 Subtotal 2,620,443 2,975,449 Reserve for obsolete inventory (6,894 ) (7,462 ) Total $ 2,613,549 $ 2,967,987 The Company recognized reversal of inventory reserve of nil nil |
Prepaid Expense and Other Curre
Prepaid Expense and Other Current Assets | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expense and Other Current Assets [Abstract] | |
PREPAID EXPENSE AND OTHER CURRENT ASSETS | NOTE 6 — PREPAID EXPENSE AND OTHER CURRENT ASSETS The current portions of prepaid expense and other current assets consist of the following: As of December 31, 2022 2021 Prepaid operating cost $ 511,453 $ 839,417 Prepaid service cost 1,024,386 912,494 Deductible input VAT - 134,111 Others 68,295 108,985 Total $ 1,604,134 $ 1,995,007 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 7 — PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: As of December 31, 2022 2021 Buildings $ 9,165,874 $ 1,971,463 Machinery equipment and tools 5,158,903 4,867,159 Electronic devices 104,020 74,206 Office equipment 21,829 14,337 Vehicles 387,780 352,921 Construction in progress 1,057,565 574,016 Subtotal 15,895,971 7,854,102 Less: accumulated depreciation (3,595,480 ) (3,230,949 ) Property, plant and equipment, net $ 12,300,491 $ 4,623,153 Depreciation expenses for the years ended December 31, 2022, 2021 and 2020 amounted to $615,050, $563,120 and $499,449, of which $546,305, $507,072 and $354,618 were included in cost of revenues, respectively, and of which $68,745, $56,048 and $144,831 were included selling, general and administrative expenses, respectively. As of December 31, 2022 and 2021, certain properties were pledged as collaterals to secure the Company’s bank loans from Rural Commercial Bank of Shandong and Bank of Weifang (see Note 9). During the years ended December 31, 2022, 2021 and 2020, respectively, the Company did not record impairment to its property, plant and equipment. |
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 consisted of the following: As of December 31, 2022 2021 Land use rights $ 5,212,049 $ 961,868 Less: accumulated amortization (250,168 ) (239,509 ) Intangible assets, net $ 4,961,881 $ 722,359 Amortization expense for the years ended December 31, 2022, 2021 and 2020 amounted to $29,618, $22,715 and $21,236, of which $16,074, $10,222 and $9,556 were included in cost of revenues, respectively, and of which $13,544, $12,493 and $11,680 were included selling, general and administrative expenses, respectively. As of December 31, 2022, certain land use rights were pledged as collaterals to secure the Company’s bank loan from Bank of Weifang (see Note 9). During the years ended December 31, 2022, 2021 and 2020, the Company had no impaired intangible assets. Amortization of intangible assets attributable to future periods as of December 31, 2022 is as follows: Amortization amount 2023 $ 115,400 2024 115,400 2025 115,400 2026 115,400 2027 115,400 Thereafter 4,384,881 Total $ 4,961,881 |
Loans
Loans | 12 Months Ended |
Dec. 31, 2022 | |
Loans [Abstract] | |
LOANS | NOTE 9 — LOANS Loans represent amounts due to various banks and financial institution on scheduled payment dates set out in the loan agreements. These loans are secured by collaterals or guarantees and are classified as short term or long term based on their respective maturities. Short-term loans Short-term loans consisted of the following at December 31, 2022 and 2021: As of December 31, 2022 2021 Rural Commercial Bank of Shandong* (1) $ 2,754,301 $ 2,981,280 Bank of Weifang* - 470,729 Postal Savings Bank of China (“PSBC”)* (2) 724,816 313,819 Industrial and Commercial Bank of China* 652,335 784,548 Shandong Heavy Industry Group Finance Co., Ltd. (“Shandong Heavy Industry Finance”) (3) 1,159,706 1,104,643 Bank of Beijing* 434,890 - Zheshang Bank 289,927 - Total $ 6,015,975 $ 5,655,019 * The loans outstanding as of December 31, 2022 and 2021 that were matured were fully repaid upon their maturity. For the years ended December 31, 2022 and 2021, the Company entered into various loan agreements with the aforementioned banks and financial institution for an aggregated amount of approximately $6.69 million and $5.94 million, respectively, to facilitate its operations. Interest rates for the loans outstanding during the years ended December 31, 2022 and 2021 range from 4.35% to 8.00% per annum for both periods. All of the short-term loans mature within one year. (1) As of December 31, 2022 and 2021, properties recorded at approximately $3.04 million and $3.29 million, respectively, was pledged as collaterals to secure one of the short-term loans from Rural Commercial Bank of Shandong (see Note 7). In addition, the Company pledged its patents as collaterals to secure the other short-term loans from Rural Commercial Bank of Shandong. (2) The balance payable to the PSBC as of December 31, 2021 pertains to borrowings under a line of credit arrangements for purchase of raw materials, which allow the Company to borrow revolving loans, which, upon borrowing, reduce the amount available for other extensions of credit up to a cumulative total RMB2.0 million, or approximately $314,000, from November 30, 2021 to November 29, 2023, the agreement was terminated in November 2022. On November 30, 2022, the Company and two of its related parties, jointly entered into a line of credit loan agreement with PSBC, which allow the Company to borrow revolving loans, which, upon borrowing, reduce the amount available for other extensions of credit up to a cumulative total RMB5.0 million, or approximately $725,000, from November 30, 2022 to November 29, 2024. (3) In August 2021, the Company entered into a factoring contract with recourse with Shandong Heavy Industry Finance, pursuant to which the Company may borrow from Shandong Heavy Industry Finance up to a cumulative total RMB10 million, or approximately $1.6 million, from August 9, 2021 to July 28, 2022 at an annual effective interest rate of 6.2%. On July 25, 2022, the Company renewed a factoring contract with recourse with Shandong Heavy Industry Finance, pursuant to which the Company may borrow from Shandong Heavy Industry Finance up to a cumulative total RMB23 million, or approximately $3.4 million, from July 25, 2022 to July 24, 2023 at an annual effective interest rate of 5.7%. As of December 31, 2022, the Company obtained loans under the factoring agreement at the total amount of RMB8.0 million (or approximately $1.2 million) by factoring the account receivables due from the Company’s largest customer, LOVOL. Shandong Heavy Industry Finance has the right of recourse to the Company, and as a result, these transactions were recognized as short-term loans. The loans are secured by up to RMB13.5 million (or $2.0 million) of the Company’s accounts receivable due from LOVOL. Substantially all outstanding short-term loans as of December 31, 2022 and 2021 were guaranteed by the CEO and the family members of the CEO, companies owned by those family members, and certain third-party companies. The Company engages companies in other industries to provide guarantees for its short-term loans. The Company agrees to provide guarantees for the short-term loans borrowed by these third-party companies in exchange for their guarantee provided to the Company. See Note 15. Interest expense pertaining to the above short-term loans for the years ended December 31, 2022, 2021 and 2020 amounted to approximately $317,000, $288,000 and $237,000, respectively, which included in the financing expenses in the Company’s consolidated statements of operations and comprehensive income. Long-term loan On December 21, 2022, the Company entered into a loan agreement with Bank of Weifang to borrow approximately $10.1 million (RMB 70 million) for the acquisition of Yingxuan Assets. The loan has a fixed 35-month term with a maturity date on November 4, 2025, and bears an annual interest rate of 6.8%. The loan is required to be repaid in 6 semi-annually instalment payments within the loan terms. The loan was guaranteed by the CEO and the family members of the CEO, and certain third-party company. In addition, the Company pledged its properties and land use rights recorded at approximately $6.5 million and $4.3 million as collaterals to secure this loan, respectively. The loan was subsequently fully repaid in April 2023 without penalty of prepayment of the date thereof. The future maturities of the long-term loan as of December 31, 2022 were as follows: Twelve months ending December 31, Future repayment 2023 $ 2,899,265 2024 2,899,265 2025 4,348,898 Total $ 10,147,428 Interest expense pertaining to the above loan for the years ended December 31, 2022, 2021 and 2020 amounted to approximately $22,000, $ nil nil |
Security Deposit Received for S
Security Deposit Received for Sales of Assets | 12 Months Ended |
Dec. 31, 2022 | |
Security Deposit Received for Sales of Assets [Abstract] | |
SECURITY DEPOSIT RECEIVED FOR SALES OF ASSETS | NOTE 10 — SECURITY DEPOSIT RECEIVED FOR SALES OF ASSETS On April 1, 2023, the Company entered into a final assets transfer agreement with Changle Youyi Plastic Technology Co., Ltd. (“Changle Youyi”), pursuant to which the Company will sell its old factory, including the land use right of one parcel of industrial land, factory buildings, machinery equipment and tools (collectively, the “Old Factory Assets”) for a total consideration of approximately RMB12.5 million (approximately $1.8 million). As the intention for such purchase, Changle Youyi paid security deposit of RMB10.0 million (approximately $1.4 million) in December 2022, and the amount was recorded as security deposit received for sales of assets on the balance sheet as of December 31, 2022. The completion of this sale of Old Factory Assets is pending on the status of the assets title transfer. The Company expects to complete the assets title transfer by the end of May 2023 and the remaining balance of approximately RMB2.5 million (approximately $0.4 million) is also expected to be received by the end of May 2023. |
Accrued Expenses and Other Paya
Accrued Expenses and Other Payables | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER PAYABLES | NOTE 11 — ACCRUED EXPENSES AND OTHER PAYABLES Accrued expenses and other payables consisted of the following: As of December 31, 2022 2021 Salary and welfare payable $ 192,832 $ 425,879 VAT and other taxes payables 396,451 24,974 Interest payable 34,565 1,898 Deferred revenue 57,906 169,087 Other accrued expenses 273,922 186,636 Total $ 955,676 $ 808,474 Failed sale and leaseback For the years ended December 31, 2022 and 2021, the Company entered into three sale and leaseback agreements for a 2-year lease of four machineries. The lease agreement offers the Company a bargain purchase option to purchase the machineries at the end of lease term for RMB100. The management evaluated the carrying amount of the underlying assets at the end of lease term and their difference between the bargain purchase consideration, and concluded that the Company is reasonably certain to exercise the bargain purchase option. This qualifies the leases as failed sale and leaseback transactions and the Company accounts for leases as financing transactions. The related current portion financing liabilities as of December 31, 2022 and 2021 of $245,532 and $175,428, respectively, are included in accrued expenses and other payables. The non-current portion of $42,220 and $378,799 as of December 31, 2022 and 2021, respectively, are presented as long-term payables on the accompanying consolidated balance sheets. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 12 — LEASES The Company entered into several lease agreements to lease machineries to facilitate its manufacturing. The original lease terms range from 13 months to three years. The lease granted the Company an option to purchase the underlying asset at the end of the lease term at a consideration of RMB0 or RMB100. The Company assessed the purchase price in relation to the value of the leased assets and accounted for the leases as finance leases. The Components of lease expenses were as follows: For the Years Ended 2022 2021 2020 Finance lease Cost: Amortization of right-of-use assets $ 10,744 $ 115,954 $ 162,611 Interest on lease liabilities 28,549 20,207 10,415 Total finance lease cost $ 39,293 $ 136,161 $ 173,026 Supplemental cash flow information related to leases was as follows: For the Years Ended 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from finance leases $ 28,549 $ 20,207 $ 10,415 Financing cash flow from finance leases $ 581,549 $ 770,242 $ 119,014 Right-of-use assets obtained in exchange for lease obligations: Finance leases $ 151,048 $ 1,355,557 $ - Supplemental balance sheet information related to leases was as follows: December 31, December 31, 2021 Finance lease right-of-use assets $ 1,299,217 $ 1,372,169 Finance lease liabilities-current $ 315,780 $ 533,808 Finance lease liabilities, non-current 46,623 292,130 Total finance lease liabilities $ 362,403 $ 825,938 Weighted-average remaining lease term (years) 1.14 2.02 Weighted-average discount rate 5.44 % 5.75 % The following table summarizes the maturity of our finance lease liabilities as of December 31, 2022: 2023 $ 326,081 2024 47,186 Total 373,267 Less imputed interest (10,864 ) Total lease liabilities $ 362,403 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 13 — INCOME TAXES Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed. Hong Kong Hongli HK is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is on its taxable income generated from operations in Hong Kong. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. United States The Company and its Subsidiaries have no presence in the United States and does not conduct business in the United States, accordingly no United States Income Tax should be imposed upon the Company and its Subsidiaries. PRC Income Tax On March 16, 2007, the National People’s Congress of the PRC enacted an Enterprise Income Tax Law (“EIT Law”), under which Foreign Investment Enterprises (“FIEs”) and domestic companies would be subject to EIT at a uniform rate of 25%. The EIT law became effective on January 1, 2008. The Company’s operating subsidiaries are all incorporated in the PRC and are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the Corporate Income Tax Law of PRC, current corporate income tax rate of 25% is applicable to all PRC companies, including both domestic and foreign-invested companies. Hongli Shandong obtained its High and New Technology Enterprises (“HNTE”) certificate with a valid period of three years in 2017. Therefore, Hongli Shandong is eligible to enjoy a preferential tax rate of 15% from 2017 to 2020 to the extent it has taxable income under the EIT Law, as long as it maintains the HNTE qualification and duly conducts relevant EIT filing procedures with the relevant tax authority. Hongli Shandong has further extended its HNTE qualification at the end of 2020 for another three years. The current and deferred portions of income tax expense included in the consolidated statements of operations and comprehensive income were as follows: For the Years Ended December 31, 2022 2021 2020 Current tax provision $ 264,467 $ 263,080 $ 239,496 Deferred tax provision 15,602 - - Income tax expense $ 280,069 $ 263,080 $ 239,496 The following table reconciles the statutory rates to the Company’s effective tax rate: For the Years Ended 2022 2021 2020 PRC statutory income tax rate 25 % 25 % 25 % Effect of income tax exemptions and reliefs (10 )% (10 )% (10 )% Effect of deferred offering costs deducted for tax purpose - (1 )% - Effect of additional deduction allowed for tax purposes (6 )% (6 )% (6 )% Effective tax rate 9 % 8 % 9 % The tax effects of temporary differences that give rise to the deferred liability were as follows: December 31, December 31, 2021 Advance payment for professional service $ 15,221 $ - Deferred tax liability $ 15,221 $ - Aggregate undistributed earnings of the Company’s subsidiary, VIE and VIE’s subsidiaries located in the PRC that are available for distribution at December 31, 2022 and 2021 are considered to be indefinitely reinvested and accordingly, no provision has been made for the Chinese dividend withholding taxes that would be payable upon the distribution of those amounts to any entity within the Company that is outside of the PRC. The Company does not have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future. It intends to retain most of its available funds and any future earnings for use in the operation and expansion of its business. As of December 31, 2022 and 2021, the Company has not declared any dividends. As of December 31, 2022 and 2021, the Company had no significant uncertain tax positions that qualify for either recognition or disclosure in the financial statements. As of December 31, 2022, income tax returns for the tax years ended December 31, 2018 through December 31, 2022 remain open for statutory examination by PRC tax authorities. The uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities. Based on the outcome of any future examinations, or as a result of the expiration of statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits for tax positions taken regarding previously filed tax returns, might materially change from those recorded as liabilities for uncertain tax positions in the Company’s consolidated financial statements as of December 31, 2022 and 2021. In addition, the outcome of these examinations may impact the valuation of certain deferred tax assets (such as net operating losses) in future periods. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits, if any, as a component of income tax expense. The Company does not anticipate any significant increases or decreases to its liability for unrecognized tax benefit within the next twelve months. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of income taxes is due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined, but an underpayment of income tax liability exceeding RMB100,000 (approximately $15,000) is specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. Accounting for Uncertainty in Income Taxes The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises have completed their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities. ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The Company’s management has evaluated the Company’s tax positions and concluded that provision for uncertainty in income taxes was not necessary as of December 31, 2022 and 2021. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 14 — CONCENTRATIONS Customer concentration risk For the years ended December 31, 2022, 2021 and 2020, three customers accounted for 48%, 46% and 35%; 23%, 19% and 27%; and *% * represents less than 10%. Vendor concentration risk For the years ended December 31, 2022, 2021 and 2020, one vendor accounted for 50%, 65%, and 62% of the Company’s total purchase, respectively. One vendor accounted for 37% and 47% of the Company’s total outstanding accounts payable as of December 31, 2022 and 2021, respectively. Exchange Rate Risks The Company’s PRC subsidiaries may be exposed to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the U.S. Dollar and the RMB. As of December 31, 2022 and 2021, the RMB denominated cash and cash equivalents amounted to $1,669,235 and $216,754, respectively. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company routinely assesses the financial strength of the customer and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. The Company’s operations are carried out in the PRC. Accordingly, our business, financial condition, and results of operations may be influenced by the political, economic, and legal environment in the PRC, and by the general state of the economy of the PRC. Our operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. All of our cash is maintained with state-owned banks within the PRC. Per PRC regulations, the maximum insured bank deposit amount is RMB500,000 for each financial institution. The Company’s total unprotected cash held in bank amounted to approximately $1,781,000 and $232,000 as of December 31, 2022 and 2021, respectively. The Company has not experienced any losses in such accounts and believes the Company is not exposed to any risks on our cash held in bank accounts. |
Related Party
Related Party | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY | NOTE 15 — RELATED PARTY The related parties had transactions for the years ended December 31, 2022 and 2021 consist of the following: Name of the related parties Nature of relationship Jie Liu CEO of the Company Yuanqing Liu Family member of the CEO, Father of the CEO Ronglan Sun Family member of the CEO, Mother of the CEO Hongyu Hao Family member of the CEO and Vice President of Purchase Department Huimin Lv CEO assistant of the Company and Vice President of HR & Administration. Yuanxiang Liu Family member of the CEO, Uncle of the CEO Li Liu Family member of the CEO, Sister of the CEO Yongqing Dong Family member of the CEO Amount due from a related party: As of December 31, 2022 2021 Huimin Lv $ - $ 1,503 Total $ - $ 1,503 Amount due to related parties: As of December 31, 2022 2021 Jie Liu $ 56,762 $ 22,392 Hongyu Hao 545,054 73,850 Yuanqing Liu - 22,328 Yongqing Dong 5,362 2,410 Huimin Lv 58 - Total $ 607,236 $ 120,980 As of December 31, 2022 and 2021, balance due from and due to related parties primarily represent monetary advancements and repayments by the related parties for its normal course of business. The amount advanced from and repaid to related parties for the years ended December 31, 2022, 2021 and 2020 were $1,768,123 and $1,258,835, $993,359 and $1,052,223, and $5,423,445 and $4,971,887, respectively. All the amount due to related parties were fully repaid by the Company as the date of this report. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 16 — SHAREHOLDERS’ EQUITY The shareholders’ equity structures as of December 31, 2022 and 2021 were presented after giving retroactive effect to the reorganization of the Company that was completed on April 12, 2021. Immediately before and after the reorganization, the shareholders of Hongli Shandong controlled Hongli Group or the Company. Therefore, for accounting purposes, the reorganization is accounted for as a transaction of entities under common control. Ordinary shares On February 9, 2021, Hongli Cayman was incorporated in the Cayman Islands. Hongli Cayman issued 97 Ordinary Shares at $0.0001 par value per share to Hongli Development Limited (“Hongli Development”) and issued 3 Ordinary Shares at $0.0001 par value per share to Hongli Technology Limited (“Hongli Technology”). On March 28, 2022, the Company’s shareholders approved an issuance of 17,999,900 new Ordinary Shares at par value $0.0001 per share, among which, 17,459,903 new Ordinary Shares were issued to Hongli Development and 539,997 new Ordinary Shares were issued to Hongli Technology, which share issuances were equivalent to a forward split of the Company’s outstanding Ordinary Shares at an approximate or rounded ratio of 180,000-for-1 share. As a result, the Company had $50,000 divided into 500,000,000 Ordinary Shares with a par value of $0.0001 per share. On September 13, 2022, the current existing shareholders of the Company surrendered 1,500,000 Ordinary Shares in total, of which Hongli Development Limited surrendered 1,455,000 Ordinary Shares and Hongli Technology Limited surrendered 45,000 Ordinary Shares, respectively. Furthermore, Hongli Development Limited surrendered another 6,500,000 Ordinary Shares on December 1, 2022. As a result, 10,000,000 Ordinary Shares were issued and outstanding as of December 31, 2022 and 2021, respectively, among which, Hongli Development Limited holds 9,505,000 Ordinary Shares and Hongli Technology Limited holds 495,000 Ordinary Shares, respectively. The shares and per share data are presented on a retroactive basis as if the reorganization, share issuance, and share surrender made by the current existing shareholders of the Company had been in existence from the earliest period presented. Initial Public Offering On March 31, 2023, the Company closed its Offering of 2,062,500 Ordinary Shares at a public offering price of $4.00 per share . Net proceeds of the Company’s Offering were approximately $7.2 million. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 309,375 Ordinary Shares at the public offering price. On May 2, 2023, the underwriter exercised the over-allotment option in full for total gross proceeds of $1,237,500 before deducting underwriting discounts and commissions. he Company’s Ordinary Shares began trading on the Nasdaq Capital Market under the symbol “HLP” on March 29, 2023. |
Surplus Reserve
Surplus Reserve | 12 Months Ended |
Dec. 31, 2022 | |
Surplus Reserve [Abstract] | |
SURPLUS RESERVE | NOTE 17 — SURPLUS RESERVE The surplus reserves in the consolidated balance sheets mainly include the Company’s statutory reserve. In accordance with the relevant laws and regulations of the PRC, the Company is required to set aside at least 10% of its respective after-tax net profits each year determined in accordance with PRC GAAP and if any, to fund the statutory reserve until the balance of the reserve reaches 50% of its respective registered capital. The statutory reserve is not distributable in the form of cash dividends and can be used to make up cumulative prior year losses. During the years ended December 31, 2022, 2021 and 2020, no earnings were appropriated to surplus reserve. The statutory reserve of Hongli Shandong amounted to $370,683 and $370,683 as of December 31, 2022 and 2021. |
Commitment
Commitment | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT | NOTE 18 — Commitment Yingxuan Acquisition In November 2020, Hongli Shandong signed a letter of intent with Yingxuan Heavy Industry Co., Ltd. (“Yingxuan”) regarding a planned purchase of all of Yingxuan’s assets located in an industrial area, including its use rights of three parcels of industrial land, buildings, facilities and infrastructure (collectively, the “Yingxuan Assets”) for a total consideration of approximately RMB 125.0 million (approximately $18.1 million). During the year ended December 31, 2021, Hongli Shandong paid the deposit of RMB 15.0 million (approximately $2.2 million) from its working capital. Following the signing of the letter of intent, in January 2021, Hongli Shandong signed asset transfer agreements with Yingxuan regarding the acquisition of the Yingxuan Assets. Pursuant to the asset transfer agreements, Hongli Shandong agreed to pay for the acquisition price in installments for approximately RMB 52.0 million (approximately $7.5 million), RMB 47.0 million (approximately $6.8 million) and RMB 11.0 million (approximately $1.6 million), respectively, by the end of December 31, 2021, 2022 and 2023. The installments bear an annual interest of 7%. However, as mutually agreed, Hongli Shandong did not pay the agreed installment in fiscal year 2021 due to the delay of the acquisition of Yingxuan Assets, and Hongli Shandong made a prepayment of RMB 7.8 million (approximately $1.1 million) for the year ended December 31, 2021. The title of use rights of two parcels of industrial land, buildings, facilities and infrastructure for consideration of approximately RMB 85.2 million (approximately $12.4 million) were transferred to Hongli Shandong on June 13, 2022. On May 5, 2023, Hongli Shandong entered into a supplementary agreement with Yingxuan. Based on the mutual agreement between the Hongli Shandong and Yingxuan, the annual interest of 7% was waived as the transfer of Yingxuan Assets was delayed due to the impact of the COVID-19 pandemic and the total consideration was adjusted to RMB 151.4 million (approximately $21.9 million) given effect of the demolition compensation to be assigned to Hongli Shandong. Meanwhile, both parties also agreed that the demolition compensation to be reimbursed by the local government in relation to Yingxuan Assets will belong to the Hongli Shandong. As of December 31, 2022, Hongli Shandong paid a total of approximately RMB 109.6 million (approximately $15.9 million), among which approximately RMB 24.4 million (approximately $3.5 million) was recorded as prepayment for the purchase of Yingxuan Assets on the consolidated balance sheets. The remaining payments of approximately RMB 41.8 million (approximately $6.0 million) will be paid by up to 30% of the proceeds from the offering and working capital of Hongli Shandong, and it is expected to be paid by December 31, 2023. Pursuant to the supplement agreement, the legal title of the remaining Yingxuan Assets will be transferred to Hongli Shandong within 30 days upon the payment of the remaining RMB 41.8 million (approximately $6.0 million) to Yingxuan. |
Restricted Net Assets or Parent
Restricted Net Assets or Parent Company's Condensed Financial Statements | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
RESTRICTED NET ASSETS OR PARENT COMPANY’S CONDENSED FINANCIAL STATEMENTS | NOTE 19 — RESTRICTED NET ASSETS OR PARENT COMPANY’S CONDENSED FINANCIAL STATEMENTS As a result of the PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Company. Amounts restricted include paid-in capital, additional paid-in capital, and the statutory reserves of the Company’s PRC subsidiaries. As of December 31, 2022 2021 PRC entities Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 10,000,000 shares issued and outstanding as of December 31, 2022 and 2021* $ 1,000 $ 1,000 Additional paid-in capital 609,601 609,601 Statutory reserves 370,683 370,683 Total restricted net assets $ 981,284 $ 981,284 * The share amounts are presented on a retroactive basis There were no reportable transactions as of December 31, 2022 and 2021 as the parent company was formed in 2021 and only serves as a holding company with minimal transactions. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20 — SUBSEQUENT EVENTS On January 6, 2023, the Company entered into a loan agreement with Bank of Beijing to borrow approximately $0.4 million (RMB3.0 million) as working capital for one year, with a maturity date of January 6, 2024. The loan bears a fixed interest rate of 4.3% per annum. The loan was guaranteed by the CEO and the family member of the CEO. On February 14, 2023, the Company entered into a loan agreement with Bank of Rizhao to borrow approximately $0.1 million (RMB1.0 million) as working capital for one year, with a maturity date of February 14, 2024. The loan bears a fixed interest rate of 5.5% per annum. The loan was guaranteed by the CEO and the family members of the CEO. On March 9, 2023, the Company entered into a loan agreement with Industrial and Commercial Bank of China to borrow approximately $0.7 million (RMB4.5 million) as working capital for one year, with a maturity date of March 8, 2024. The loan bears a fixed interest rate of 4.35% per annum. The loan was guaranteed by the family members of the CEO. On March 20, 2023, the Company entered into a loan agreement with Zhongjin Jiarun (Beijing) Jewellery Co., Ltd., a third party, to borrow approximately $0.7 million (RMB5.0 million) as working capital for one year, with a maturity date of March 20, 2024. The loan bears a fixed interest rate of 7.0% per annum. On April 21, 2023, Hongli Shandong entered an entrusted loan agreement with Bank of Weifang (the “Entrustee”) and WFOE (the “Entruster”) to borrow approximately $7.2 million (RMB49.8 million) as working capital for three years, with a maturity date of April 20, 2026. The loan bears a fixed interest rate of 2.0% per annum. The loan is required to be repaid in 6 semi-annually instalment payments within the loan terms. Each payment of the first five instalments is $1,450 (RMB10,000) and the final instalment is approximately $7.2 million (RMB49.75 million). On April 23, 2023, the Company entered into a loan agreement with Bank of Weifang to borrow approximately $1.45 million (RMB10.0 million) as working capital for three years, with a maturity date of April 22, 2026. The loan bears a fixed interest rate of 4.0% per annum. The loan is required to be repaid in 6 semi-annually instalment payments within the loan terms. Each payment of the first five instalments is approximately $0.01 million (RMB0.1 million) and the final instalment is approximately $1.4 million (RMB9.5 million). The loan is guaranteed by the CEO, the family members of the CEO, and Jiekenuosen (Shandong) Lubricating Oil Technology Co., Ltd., a related-party that is controlled by the family member of the CEO. On April 28, 2023, the Company entered into a loan agreement with Rural Commercial Bank of Shandong to borrow approximately $2.0 million (RMB14.0 million) as working capital for three years, with a maturity date of April 27, 2026. The loan bears a fixed interest rate of 4.1% per annum. The loan is required to make the first instalment payment in June 2023, then 5 semi-annually instalment payments within the remaining term of the loan, and the last instalment to be paid at the maturity date. Each payment of the first six instalments is $1,450 (RMB10,000) and the final instalment is approximately $2.0 million (RMB13.94 million). The loan was guaranteed by the CEO and the family members of the CEO. In addition, the Company pledged its properties as collaterals to secure this loan. In April 2023, to repay the long-term bank loan from Bank of Weifang, the Company borrowed an aggregate of approximately $4.1 million (approximately RMB 28.0 million) from Jie Liu, the CEO of the Company. The borrowings are unsecured, non-interest bearing, and due on demand. As of the date of this annual report, approximately $2.8 million (approximately RMB 19.3 million) has been returned to Jie Liu, and the remaining balance is expected to be repaid before December 31, 2023. In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2022 to the filing date of these consolidated financial statements, and has determined that, there are no additional material subsequent events to disclose in these consolidated financial statements other than as disclosed above. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the rules and regulations of the U.S. Securities Exchange Commission (“SEC”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation. |
Noncontrolling Interest | Noncontrolling Interest Noncontrolling interest on the consolidated balance sheets results from the consolidation of Haozhen, a 70% owned subsidiary starting from September 18, 2020. For the years ended December 31, 2022, 2021 and 2020, Haozhen did not commence any operation and the portion of the income or loss applicable to the noncontrolling interest in subsidiary for the years ended December 31, 2022, 2021 and 2020 is nil. |
Use of Estimates | Use of Estimates In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventory write-down, useful lives of property, plant and equipment and intangible assets, valuation allowance of deferred tax assets. Actual results could differ from those estimates. |
Related Parties Transactions | Related Parties Transactions A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. |
Foreign Currency Translation | Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows may not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss) included in consolidated balance sheets and statements of changes in shareholders’ equity. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates with any transaction gain and or losses are included in the results of operations as incurred. Gain (loss) from foreign currency transactions recognized and included in the consolidated statements of operations and comprehensive income for the years ended December 31, 2022, 2021 and 2020, amounted to approximately $197,000, $(43,000) and $(102,000), respectively. The value of RMB against U.S. Dollar may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s consolidated financial condition in terms of reporting. The following table outlines the currency exchange rates that were used in the consolidated financial statements: December 31, December 31, December 31, Year-end spot rate US$1 = 6.8983 RMB US$1 = 6.3731 RMB US$1 = 6.5378 RMB Average rate US$1 = 6.7299 RMB US$1 = 6.4512 RMB US$1 = 6.9003 RMB |
Fair Value Measurement | Fair Value Measurement The fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, time deposits, accounts receivable, and other current assets, accounts payable, short-term bank borrowings and other current liabilities, approximate their fair values because of the short maturity of these instruments and market rates of interest. ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — Quoted prices in active markets for identical assets and liabilities. ● Level 2 — Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash and cash equivalents, notes receivable, accounts receivable, net, inventories, net, prepaid expense and other current assets, accounts payables, income tax payable, accrued expenses and other current liabilities and short-term loans approximate the fair value of the respective assets and liabilities as of December 31, 2022 and 2021 owing to their short-term or present value nature or present value of the assets and liabilities. |
Earnings per Share | Earnings per Share Under the provisions of ASC 260, “Earnings Per Share”, basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of ordinary shares outstanding for the periods presented. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary shares that would then share in the income of the company, subject to anti-dilution limitations. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash accounts, interest-bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of the bank accounts in the PRC. |
Restricted Cash | Restricted Cash Restricted cash consists of cash deposited with the PRC bank and used as collateral to secure the Company’s note receivable payments. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires entities to present the aggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flows will be required to present restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents. The Company adopted the updated guidance and presented restricted cash within the ending cash, cash equivalents, and restricted cash balance on the Company’s consolidated statement of cash flows for the periods presented. |
Accounts Receivable | Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management’s review of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts, when account receivables are deemed uncollectible, after all means of collection efforts have been exhausted and the potential for recovery is considered remote. The Company has written off an account receivable balance of $7,296 and $ nil |
Inventories, Net | Inventories, Net Inventories are stated at the lower of cost or net realizable value. Cost is determined on the weighted average basis. Work-in-progress inventories consist of raw materials, direct labor and overhead associated with the manufacturing process. Finished goods included inventory finished in the Company’s own warehouse and goods in transit, which has not met the criteria of revenue recognition. The Company periodically assesses the recoverability of all inventories to determine whether adjustments are required to record inventories at the lower of cost or net realizable value. Inventories that the Company determines to be obsolete or in excess of forecasted usage are reduced to its estimated realizable value based on assumptions about future demand and market conditions. A write down of potentially obsolete or slow-moving inventory is recorded based on management’s analysis of inventory levels. |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs consist principally of all direct offering costs incurred by the Company, such as underwriting, legal, accounting, consulting, printing, and other registration related costs in connection with the initial public offering (“IPO”) of the Company’s ordinary shares. Such costs are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds. In the event the offering is unsuccessful or aborted, the costs will be expensed. |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant 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 a 5% residual value. The estimated useful lives are as follows: Useful Lives Buildings 30 Years Machinery equipment 10 Years Vehicles 4 – 5 Years Office equipment 5 Years Tools 3 – 5 Years Electronic devices 3 – 5 Years 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 operations and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation and amortization to determine whether subsequent events and circumstances indicate a change in estimates of useful lives. |
Intangible Assets, Net | Intangible Assets, Net Intangible assets are stated at cost, less accumulated amortization. Amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets. All land in the PRC is owned by the government; however, the government grants “land use rights.” The Company has obtained rights to use various parcels of land for between 42 and 46 years. The Company amortizes the cost of the land use rights over their useful life using the straight-line method. |
Impairment for Long- | Impairment for Long-Lived Assets Long-lived assets, including property, plant and equipment and intangible 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 assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted 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 would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. There was no impairment of long-lived assets recognized for the years ended December 31, 2022, 2021 and 2020, respectively. |
Lease Commitments | Lease Commitments The Company has adopted the new lease standard, ASC 842, Leases (Topic 842) for all periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC Topic 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheets for any new or existing lease arrangements with lease terms of twelve months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. In addition, the Company elected the land easement transition practical expedient and did not reassess whether an existing or expired land easement is a lease or contains a lease if it has not historically been accounted for as a lease. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes optional renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. In cases of sale and leaseback transactions, if the transfer of the asset to the lessor does not qualify as a sale, then the transaction constitutes a failed sale and leaseback and is accounted for as a financing transaction. For a sale to have occurred, the control of the asset would need to be transferred to the lessor, and the lessor would need to obtain substantially all the benefits from the use of the asset. The Company has entered into a sale and leaseback transaction which qualified as failed sale and leaseback transaction as the Company has a purchase obligation to acquire the machinery at the end of the lease term. The asset has been included in the property, plant and equipment, and the amortization is computed based on the shorter of the financing terms or the estimated useful life. |
Revenue Recognition | Revenue Recognition The Company has adopted the new revenue standard, ASC 606, Revenue from Contracts with Customers (Topic 606) for all periods presented. Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods, in an amount that reflects the consideration which the Company expects to receive in exchange for the goods. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies a performance obligation. The Company applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. Revenue is recognized net of value-added tax. The Company’s revenue is principally derived from sales of products in domestic and overseas markets. Revenue is recognized at the point in time when the performance obligation has been satisfied and control of the products have been transferred to the customers, which generally occurs upon shipment for overseas customers and acceptance for domestic customers based on the terms of the sales contracts. Revenue is measured by the transaction price, which is defined as the amount of consideration the Company expects to receive in exchange for selling products to customers. The Company does not offer or agree on terms that result in variable consideration during the periods presented. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time is required before payments are due. The Company does not grant payment terms greater than one year. Additionally, the Company does not offer promotional payments, customer coupons, rebates or other cash redemptions offers to its customers. The Company does not have any contract asset. Contract liabilities are recorded when consideration is received from a customer prior to transferring the control of goods to the customer or other conditions under the terms of a sales contract. As of December 31, 2022 and 2021, the Company recorded contract liabilities, included in accrued expenses and other payables, of $57,906 and $169,087, respectively. The Company recognized $124,687, $16,127 and $36,026 of beginning contract liabilities as revenue for the years ended December 31, 2022, 2021 and 2020, respectively. The Company is expected to recognize the December 31, 2022’s ending contract liabilities of $57,906 during the year ended December 31, 2023 as revenues. The Company’s net revenue segregated by geographic regions is as follows: For the Years Ended December 31, 2022 2021 2020 PRC $ 15,285,549 $ 16,844,113 $ 7,860,794 Overseas 4,997,696 4,869,025 3,298,026 Total $ 20,283,245 $ 21,713,138 $ 11,158,820 |
Value Added Tax | Value Added Tax Hongli Shandong and its subsidiaries are subject to a VAT of 13% for its business practice. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of the product sold. The Company reports revenue net of PRC’s VAT for all the periods presented on the consolidated statements of operations and comprehensive income. |
Cost of Revenues | Cost of Revenues Amounts recorded as cost of revenue relate to direct expenses incurred in order to generate revenue. Such costs are recorded as incurred. Cost of revenues consists of product costs, including costs of raw material, contract manufacturers for production, shipping and handling costs, manufacturing and tooling equipment depreciation. |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist primarily of salary and welfare for research and development personnel, consulting and contractor expenses, testing and tooling materials and other expenses in associated with research and development personnel. The Company recognizes research and development expenses as expense when incurred. Research and development expenses were $1,412,355, $1,466,682 and $643,958 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Sales and Marketing Expenses | Sales and Marketing Expenses Sales and marketing expenses consist primarily of salary and welfare for sales and marketing personnel, promotion and marketing expenses and other expenses in associated with sales and marketing personnel. The Company recognized $596,620, $641,778 and $291,534 of sales and marketing expenses for the years ended December 31, 2022, 2021 and 2020, respectively. |
Income Taxes | Income Taxes The Company follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence; it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in the tax rate. The Company accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of operations and comprehensive income as income tax expense. No such expenses incurred during the years ended December 31, 2022, 2021 and 2020. |
Government Subsidy | Government Subsidy Government grants include cash subsidies as well as other subsidies received from various government agencies by the subsidiaries of the Company. Such subsidies are generally provided as incentives from the local government to encourage the expansion of local business. The government grant is recognized in the consolidated statements of income and comprehensive income when the relevant performance criteria specified in the grant are met, for instance, locating contact centers in their jurisdictions or helping local employment needs. The government subsidy granted to the Company was $37,740, $18,214 and $530,410 for the years ended December 31, 2022, 2021 and 2020, respectively and included in other income in the consolidated statements of operations and comprehensive income. |
Statutory Reserves | Statutory Reserves The Company’s PRC subsidiaries are required to make appropriations to certain non-distributable reserve funds. In accordance with China’s Company Laws, the Company’s PRC subsidiary that are Chinese companies, must make appropriations from their after-tax profit (as determined under the Accounting Standards for Business Enterprises as promulgated by the Ministry of Finance of the People’s Republic of China (“PRC GAAP”)) to non-distributable reserve funds including (i) statutory surplus fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the respective company. Appropriation to the discretionary surplus fund is made at the discretion of the respective company. Pursuant to the laws applicable to China’s Foreign Investment Enterprises, the Company’s subsidiaries that are foreign investment enterprises in China have to make appropriations from their after-tax profit (as determined under PRC GAAP) to reserve funds including (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the respective company. Appropriations to the other two reserve funds are at the respective company’s discretion. The use of the general reserve fund, statutory surplus fund and discretionary surplus fund are restricted to the offsetting of losses to increase the registered capital of the respective company. These reserves are not allowed to be transferred out as cash dividends, loans or advances, nor can they be distributed except under liquidation. |
Comprehensive Income | Comprehensive Income Comprehensive income is comprised of net income and all changes to the statements of shareholders’ equity, except those due to investments by shareholders, changes in paid-in capital and distributions to shareholders. For the Company, comprehensive income for the years ended December 31, 2022, 2021 and 2020 consisted of net income and unrealized gain (loss) from foreign currency translation adjustment. |
Segment Reporting | Segment Reporting The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued and assesses the impacts on the Company’s consolidated financial position and/or results of operations. In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments (Topic 326)”, and issued subsequent amendments to the initial guidance, transitional guidance and other interpretive guidance between November 2018 and March 2020 within ASU2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03. ASU 2016-13 introduces new guidance for credit losses on instruments within its scope, which significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life, instead of when incurred. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt this ASU through a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company has adopted this ASU starting January 1, 2020. The adoption did not pose material impact to the Company’s financial presentation. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The ASU is effective for fiscal years beginning after December 15, 2020 and will be applied either retrospectively or prospectively based upon the applicable amendments. Early adoption is permitted. The Company has adopted this ASU starting January 1, 2021. The adoption did not pose material impact to the Company’s financial presentation. The Company does not believe other recently issued but not yet effective accounting standards would have a material effect on its consolidated financial position, statements of operations and cash flows. |
Organization and Nature of Op_2
Organization and Nature of Operations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
Schedule of consolidated VIE and subsidiaries | Name Date of Organization Place of Organization Subsidiaries Hongli Hong Kong Limited (“Hongli HK”) March 5, 2021 Hong Kong SAR Shandong Xiangfeng Heavy Industry Co., Ltd. (“WFOE”) April 8, 2021 People’s Republic of China (“PRC”) VIE and Its Subsidiaries Shandong Hongli Special Section Tube Co., Ltd., (“Hongli Shandong”) September 13, 1999 PRC Shandong Maituo Heavy Industry Co., Ltd. (“Maituo”) (1) May 23, 2019 PRC Shandong Haozhen Heavy Industry Co., Ltd. (“Haozhen Shandong”) (2) September 18, 2020 PRC (1) Wholly owned subsidiary of Hongli Shandong (2) Haozhen Shandong is jointly established by Hongli Shandong and Sungda Tech Co., Ltd., a 30% owner of Haozhen Shandong |
Schedule of consolidated financial information of the VIE and VIE’s subsidiaries | As of December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 2,085,033 $ 484,389 Restricted cash 29,006 47,073 Accounts receivable 7,429,904 5,009,547 Notes receivable 302,775 892,507 Inventories, net 2,613,549 2,967,987 Due from a related party - 1,503 Prepaid expense and other current assets 1,604,134 1,995,007 Total current assets 14,064,401 11,398,013 Non-current assets Property, plant and equipment, net 12,300,491 4,623,153 Prepayment for purchase of Yingxuan Assets 3,535,975 3,640,859 Intangible assets, net 4,961,881 722,359 Finance lease right-of-use assets, net 1,299,217 1,372,169 Other non-current assets 2,174 89,193 TOTAL ASSETS $ 36,164,139 $ 21,845,746 Net Assets $ 13,474,693 $ 11,488,596 LIABILITIES Current liabilities Short-term loans $ 6,015,975 $ 5,655,019 Accounts payable 2,957,110 2,447,982 Security deposit received for sales of properties 1,449,633 - Due to related parties 607,236 120,980 Income tax payable 136,544 119,958 Finance lease obligation, current 315,780 533,808 Accrued expenses and other payables 955,676 808,474 Total current liabilities 12,437,954 9,686,221 Long-term loans 10,147,428 - Long-term payable 42,220 378,799 Finance lease obligation, non-current 46,623 292,130 Deferred tax liability 15,221 - TOTAL LIABILITIES $ 22,689,446 $ 10,357,150 |
Schedule of consolidated operating informationof the VIE and VIE’s subsidiaries | For the Years Ended December 31, 2022 2021 2020 Revenues, net $ 20,283,245 $ 21,713,138 $ 11,158,820 Gross profit $ 7,008,493 $ 7,654,308 $ 4,452,517 Income from operations $ 2,921,322 $ 3,935,411 $ 2,469,504 Net income $ 2,932,363 $ 3,202,212 $ 2,423,941 |
Significant Accounting Polici_2
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
Schedule of currency exchange rates | December 31, December 31, December 31, Year-end spot rate US$1 = 6.8983 RMB US$1 = 6.3731 RMB US$1 = 6.5378 RMB Average rate US$1 = 6.7299 RMB US$1 = 6.4512 RMB US$1 = 6.9003 RMB |
Schedule of property, plant and equipment | Useful Lives Buildings 30 Years Machinery equipment 10 Years Vehicles 4 – 5 Years Office equipment 5 Years Tools 3 – 5 Years Electronic devices 3 – 5 Years |
Schedule of net revenue segregated by geographic regions | For the Years Ended December 31, 2022 2021 2020 PRC $ 15,285,549 $ 16,844,113 $ 7,860,794 Overseas 4,997,696 4,869,025 3,298,026 Total $ 20,283,245 $ 21,713,138 $ 11,158,820 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable [Abstract] | |
Schedule of accounts receivable | As of December 31, 2022 2021 Accounts receivable, gross $ 7,429,904 $ 5,009,547 Less: allowance for doubtful accounts - - Accounts receivable, net $ 7,429,904 $ 5,009,547 |
Notes Receivable (Tables)
Notes Receivable (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Notes Receivable [Abstract] | |
Schedule of notes receivable consisted | As of December 31, 2022 2021 Due in the first quarter of 2022 $ - $ 49,378 Due in the second quarter of 2022 - 761,537 Due in the third quarter of 2022 - 81,592 Due in the first quarter of 2023 116,280 - Due in the second quarter of 2023 94,589 - Due in the third quarter of 2023 91,906 - Total $ 302,775 $ 892,507 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, net | As of December 31, 2022 2021 Raw materials $ 896,766 $ 664,329 Work in progress 1,324,655 1,956,206 Finished goods 399,022 354,914 Subtotal 2,620,443 2,975,449 Reserve for obsolete inventory (6,894 ) (7,462 ) Total $ 2,613,549 $ 2,967,987 |
Prepaid Expense and Other Cur_2
Prepaid Expense and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expense and Other Current Assets [Abstract] | |
Schedule of prepaid expense and other current assets | As of December 31, 2022 2021 Prepaid operating cost $ 511,453 $ 839,417 Prepaid service cost 1,024,386 912,494 Deductible input VAT - 134,111 Others 68,295 108,985 Total $ 1,604,134 $ 1,995,007 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipmen net | As of December 31, 2022 2021 Buildings $ 9,165,874 $ 1,971,463 Machinery equipment and tools 5,158,903 4,867,159 Electronic devices 104,020 74,206 Office equipment 21,829 14,337 Vehicles 387,780 352,921 Construction in progress 1,057,565 574,016 Subtotal 15,895,971 7,854,102 Less: accumulated depreciation (3,595,480 ) (3,230,949 ) Property, plant and equipment, net $ 12,300,491 $ 4,623,153 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | As of December 31, 2022 2021 Land use rights $ 5,212,049 $ 961,868 Less: accumulated amortization (250,168 ) (239,509 ) Intangible assets, net $ 4,961,881 $ 722,359 |
Schedule of amortization of intangible assets | Amortization amount 2023 $ 115,400 2024 115,400 2025 115,400 2026 115,400 2027 115,400 Thereafter 4,384,881 Total $ 4,961,881 |
Loans (Tables)
Loans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loans [Abstract] | |
Schedule of short-term loans consisted | As of December 31, 2022 2021 Rural Commercial Bank of Shandong* (1) $ 2,754,301 $ 2,981,280 Bank of Weifang* - 470,729 Postal Savings Bank of China (“PSBC”)* (2) 724,816 313,819 Industrial and Commercial Bank of China* 652,335 784,548 Shandong Heavy Industry Group Finance Co., Ltd. (“Shandong Heavy Industry Finance”) (3) 1,159,706 1,104,643 Bank of Beijing* 434,890 - Zheshang Bank 289,927 - Total $ 6,015,975 $ 5,655,019 * The loans outstanding as of December 31, 2022 and 2021 that were matured were fully repaid upon their maturity. (1) As of December 31, 2022 and 2021, properties recorded at approximately $3.04 million and $3.29 million, respectively, was pledged as collaterals to secure one of the short-term loans from Rural Commercial Bank of Shandong (see Note 7). In addition, the Company pledged its patents as collaterals to secure the other short-term loans from Rural Commercial Bank of Shandong. (2) The balance payable to the PSBC as of December 31, 2021 pertains to borrowings under a line of credit arrangements for purchase of raw materials, which allow the Company to borrow revolving loans, which, upon borrowing, reduce the amount available for other extensions of credit up to a cumulative total RMB2.0 million, or approximately $314,000, from November 30, 2021 to November 29, 2023, the agreement was terminated in November 2022. On November 30, 2022, the Company and two of its related parties, jointly entered into a line of credit loan agreement with PSBC, which allow the Company to borrow revolving loans, which, upon borrowing, reduce the amount available for other extensions of credit up to a cumulative total RMB5.0 million, or approximately $725,000, from November 30, 2022 to November 29, 2024. (3) In August 2021, the Company entered into a factoring contract with recourse with Shandong Heavy Industry Finance, pursuant to which the Company may borrow from Shandong Heavy Industry Finance up to a cumulative total RMB10 million, or approximately $1.6 million, from August 9, 2021 to July 28, 2022 at an annual effective interest rate of 6.2%. On July 25, 2022, the Company renewed a factoring contract with recourse with Shandong Heavy Industry Finance, pursuant to which the Company may borrow from Shandong Heavy Industry Finance up to a cumulative total RMB23 million, or approximately $3.4 million, from July 25, 2022 to July 24, 2023 at an annual effective interest rate of 5.7%. As of December 31, 2022, the Company obtained loans under the factoring agreement at the total amount of RMB8.0 million (or approximately $1.2 million) by factoring the account receivables due from the Company’s largest customer, LOVOL. Shandong Heavy Industry Finance has the right of recourse to the Company, and as a result, these transactions were recognized as short-term loans. The loans are secured by up to RMB13.5 million (or $2.0 million) of the Company’s accounts receivable due from LOVOL. |
Schedule of future maturities of the long-term loan | Twelve months ending December 31, Future repayment 2023 $ 2,899,265 2024 2,899,265 2025 4,348,898 Total $ 10,147,428 |
Accrued Expenses and Other Pa_2
Accrued Expenses and Other Payables (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other payables | As of December 31, 2022 2021 Salary and welfare payable $ 192,832 $ 425,879 VAT and other taxes payables 396,451 24,974 Interest payable 34,565 1,898 Deferred revenue 57,906 169,087 Other accrued expenses 273,922 186,636 Total $ 955,676 $ 808,474 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of lease expenses | For the Years Ended 2022 2021 2020 Finance lease Cost: Amortization of right-of-use assets $ 10,744 $ 115,954 $ 162,611 Interest on lease liabilities 28,549 20,207 10,415 Total finance lease cost $ 39,293 $ 136,161 $ 173,026 |
Schedule of supplemental cash flow information related to leases | For the Years Ended 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from finance leases $ 28,549 $ 20,207 $ 10,415 Financing cash flow from finance leases $ 581,549 $ 770,242 $ 119,014 Right-of-use assets obtained in exchange for lease obligations: Finance leases $ 151,048 $ 1,355,557 $ - |
Schedule of supplemental balance sheet information related to leases | December 31, December 31, 2021 Finance lease right-of-use assets $ 1,299,217 $ 1,372,169 Finance lease liabilities-current $ 315,780 $ 533,808 Finance lease liabilities, non-current 46,623 292,130 Total finance lease liabilities $ 362,403 $ 825,938 Weighted-average remaining lease term (years) 1.14 2.02 Weighted-average discount rate 5.44 % 5.75 % |
Schedule of maturity of our finance lease liabilities | 2023 $ 326,081 2024 47,186 Total 373,267 Less imputed interest (10,864 ) Total lease liabilities $ 362,403 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of current and deferred portions of income tax expense | For the Years Ended December 31, 2022 2021 2020 Current tax provision $ 264,467 $ 263,080 $ 239,496 Deferred tax provision 15,602 - - Income tax expense $ 280,069 $ 263,080 $ 239,496 |
Schedule of effective tax rate | For the Years Ended 2022 2021 2020 PRC statutory income tax rate 25 % 25 % 25 % Effect of income tax exemptions and reliefs (10 )% (10 )% (10 )% Effect of deferred offering costs deducted for tax purpose - (1 )% - Effect of additional deduction allowed for tax purposes (6 )% (6 )% (6 )% Effective tax rate 9 % 8 % 9 % |
Schedule of deferred liability | December 31, December 31, 2021 Advance payment for professional service $ 15,221 $ - Deferred tax liability $ 15,221 $ - |
Related Party (Tables)
Related Party (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of related parties transactions | Name of the related parties Nature of relationship Jie Liu CEO of the Company Yuanqing Liu Family member of the CEO, Father of the CEO Ronglan Sun Family member of the CEO, Mother of the CEO Hongyu Hao Family member of the CEO and Vice President of Purchase Department Huimin Lv CEO assistant of the Company and Vice President of HR & Administration. Yuanxiang Liu Family member of the CEO, Uncle of the CEO Li Liu Family member of the CEO, Sister of the CEO Yongqing Dong Family member of the CEO |
Schedule of amount due from a related party | As of December 31, 2022 2021 Huimin Lv $ - $ 1,503 Total $ - $ 1,503 |
Schedule of amount due to related parties | As of December 31, 2022 2021 Jie Liu $ 56,762 $ 22,392 Hongyu Hao 545,054 73,850 Yuanqing Liu - 22,328 Yongqing Dong 5,362 2,410 Huimin Lv 58 - Total $ 607,236 $ 120,980 |
Restricted Net Assets or Pare_2
Restricted Net Assets or Parent Company's Condensed Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of amounts restricted include paid-in capital, additional paid-in capital, and the statutory reserves | As of December 31, 2022 2021 PRC entities Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 10,000,000 shares issued and outstanding as of December 31, 2022 and 2021* $ 1,000 $ 1,000 Additional paid-in capital 609,601 609,601 Statutory reserves 370,683 370,683 Total restricted net assets $ 981,284 $ 981,284 * The share amounts are presented on a retroactive basis |
Organization and Nature of Op_3
Organization and Nature of Operations (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
May 02, 2023 | Feb. 09, 2021 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 28, 2022 | |
Organization and Nature of Operations (Details) [Line Items] | |||||||
Contributed aggregate revenue percentage | 100% | 100% | 100% | ||||
Public offering price per share (in Dollars per share) | $ 0.0001 | $ 0.0001 | |||||
Subsequent Event [Member] | |||||||
Organization and Nature of Operations (Details) [Line Items] | |||||||
Public offering price per share (in Dollars per share) | $ 4 | ||||||
Additional shares issued (in Shares) | 309,375 | ||||||
Subsequent Event [Member] | IPO [Member] | |||||||
Organization and Nature of Operations (Details) [Line Items] | |||||||
Issued shares (in Shares) | 2,062,500 | ||||||
Public offering price per share (in Dollars per share) | $ 4 | ||||||
Total gross proceeds (in Dollars) | $ 8,250,000 | ||||||
Subsequent Event [Member] | Over-Allotment Option [Member] | |||||||
Organization and Nature of Operations (Details) [Line Items] | |||||||
Total gross proceeds (in Dollars) | $ 1,237,500 | ||||||
Haozhen Shandong [Member] | |||||||
Organization and Nature of Operations (Details) [Line Items] | |||||||
Ownership percentage | 30% | ||||||
Hongli Cayman [Member] | |||||||
Organization and Nature of Operations (Details) [Line Items] | |||||||
Issued shares (in Shares) | 100 |
Organization and Nature of Op_4
Organization and Nature of Operations (Details) - Schedule of consolidated VIE and subsidiaries | 12 Months Ended | |
Dec. 31, 2022 | ||
Hongli Hong Kong Limited (“Hongli HK”) [Member] | ||
Subsidiaries | ||
Date of Organization | Mar. 05, 2021 | |
Place of Organization | Hong Kong SAR | |
Shandong Xiangfeng Heavy Industry Co., Ltd. (“WFOE”) [Member] | ||
Subsidiaries | ||
Date of Organization | Apr. 08, 2021 | |
Place of Organization | People’s Republic of China (“PRC”) | |
Shandong Hongli Special Section Tube Co., Ltd., (“Hongli Shandong”) [Member] | ||
Subsidiaries | ||
Date of Organization | Sep. 13, 1999 | |
Place of Organization | PRC | |
Shandong Maituo Heavy Industry Co., Ltd. (“Maituo”) [Member] | ||
Subsidiaries | ||
Date of Organization | May 23, 2019 | [1] |
Place of Organization | PRC | [1] |
Shandong Haozhen Heavy Industry Co., Ltd. (“Haozhen Shandong”) [Member] | ||
Subsidiaries | ||
Date of Organization | Sep. 18, 2020 | [2] |
Place of Organization | PRC | [2] |
[1]Wholly owned subsidiary of Hongli Shandong[2]Haozhen Shandong is jointly established by Hongli Shandong and Sungda Tech Co., Ltd., a 30% owner of Haozhen Shandong |
Organization and Nature of Op_5
Organization and Nature of Operations (Details) - Schedule of consolidated financial information of the VIE and VIE’s subsidiaries - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 2,085,033 | $ 484,389 |
Restricted cash | 29,006 | 47,073 |
Accounts receivable | 7,429,904 | 5,009,547 |
Notes receivable | 302,775 | 892,507 |
Inventories, net | 2,613,549 | 2,967,987 |
Due from a related party | 1,503 | |
Prepaid expense and other current assets | 1,604,134 | 1,995,007 |
Total current assets | 14,064,401 | 11,398,013 |
Non-current assets | ||
Property, plant and equipment, net | 12,300,491 | 4,623,153 |
Prepayment for purchase of Yingxuan Assets | 3,535,975 | 3,640,859 |
Intangible assets, net | 4,961,881 | 722,359 |
Finance lease right-of-use assets, net | 1,299,217 | 1,372,169 |
Other non-current assets | 2,174 | 89,193 |
TOTAL ASSETS | 36,164,139 | 21,845,746 |
Net Assets | 13,474,693 | 11,488,596 |
Current liabilities | ||
Short-term loans | 6,015,975 | 5,655,019 |
Accounts payable | 2,957,110 | 2,447,982 |
Security deposit received for sales of properties | 1,449,633 | |
Due to related parties | 607,236 | 120,980 |
Income tax payable | 136,544 | 119,958 |
Finance lease obligation, current | 315,780 | 533,808 |
Accrued expenses and other payables | 955,676 | 808,474 |
Total current liabilities | 12,437,954 | 9,686,221 |
Long-term loans | 10,147,428 | |
Long-term payable | 42,220 | 378,799 |
Finance lease obligation, non-current | 46,623 | 292,130 |
Deferred tax liability | 15,221 | |
TOTAL LIABILITIES | $ 22,689,446 | $ 10,357,150 |
Organization and Nature of Op_6
Organization and Nature of Operations (Details) - Schedule of consolidated operating informationof the VIE and VIE’s subsidiaries - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule Of Consolidated Operating Informationof The Vie And Vie SSubsidiaries [Abstract] | |||
Revenues, net | $ 20,283,245 | $ 21,713,138 | $ 11,158,820 |
Gross profit | 7,008,493 | 7,654,308 | 4,452,517 |
Income from operations | 2,921,322 | 3,935,411 | 2,469,504 |
Net income | $ 2,932,363 | $ 3,202,212 | $ 2,423,941 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 18, 2020 | |
Significant Accounting Policies (Details) [Line Items] | |||||
Securities percentage | 10% | ||||
Gain (loss) from foreign currency transactions | $ 197,000 | $ (43,000) | $ (102,000) | ||
Account receivable | $ 7,296 | ||||
Property, plant and equipment estimated useful lives percentage | 5% | ||||
Accrued expenses | $ 57,906 | ||||
Other payables | 169,087 | ||||
Contract liabilities | $ 124,687 | 16,127 | 36,026 | ||
Value added tax percentage | 13% | ||||
Research and development expenses | $ 1,412,355 | 1,466,682 | 643,958 | ||
Sales and marketing expenses | $ 596,620 | $ 641,778 | $ 291,534 | ||
Granted amount (in Shares) | 37,740 | 18,214 | 530,410 | ||
Statutory reserves description | (i) statutory surplus fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the respective company. Appropriation to the discretionary surplus fund is made at the discretion of the respective company. | ||||
Number of operating segment | 1 | ||||
Minimum [Member] | |||||
Significant Accounting Policies (Details) [Line Items] | |||||
Useful life term | 42 years | ||||
Maximum [Member] | |||||
Significant Accounting Policies (Details) [Line Items] | |||||
Useful life term | 46 years | ||||
Equity Ownership [Member] | |||||
Significant Accounting Policies (Details) [Line Items] | |||||
Owned percentage | 70% | ||||
Forecast [Member] | |||||
Significant Accounting Policies (Details) [Line Items] | |||||
Contract liabilities | $ 57,906 | ||||
China’s Foreign Investment Enterprises [Member] | |||||
Significant Accounting Policies (Details) [Line Items] | |||||
Statutory reserves description | (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the respective company. |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - Schedule of currency exchange rates | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Currency Exchange Rates [Abstract] | |||
Year-end spot rate | US$1 = 6.8983 RMB | US$1 = 6.3731 RMB | US$1 = 6.5378 RMB |
Average rate | US$1 = 6.7299 RMB | US$1 = 6.4512 RMB | US$1 = 6.9003 RMB |
Significant Accounting Polici_5
Significant Accounting Policies (Details) - Schedule of property, plant and equipment | 12 Months Ended |
Dec. 31, 2022 | |
Buildings [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 30 |
Machinery equipment [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 10 |
Vehicles [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 4 |
Vehicles [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 5 |
Office equipment [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 5 |
Tools [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 3 |
Tools [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 5 |
Electronic devices [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 3 |
Electronic devices [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property, plant and equipment estimated useful life | 5 |
Significant Accounting Polici_6
Significant Accounting Policies (Details) - Schedule of net revenue segregated by geographic regions - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Significant Accounting Policies (Details) - Schedule of net revenue segregated by geographic regions [Line Items] | |||
Total | $ 20,283,245 | $ 21,713,138 | $ 11,158,820 |
PRC [Member] | |||
Significant Accounting Policies (Details) - Schedule of net revenue segregated by geographic regions [Line Items] | |||
Total | 15,285,549 | 16,844,113 | 7,860,794 |
Overseas [Member] | |||
Significant Accounting Policies (Details) - Schedule of net revenue segregated by geographic regions [Line Items] | |||
Total | $ 4,997,696 | $ 4,869,025 | $ 3,298,026 |
Accounts Receivable (Details)
Accounts Receivable (Details) - Dec. 31, 2022 ¥ in Millions, $ in Millions | USD ($) | CNY (¥) |
Credit Loss, Additional Improvements [Abstract] | ||
Accounts receivable | $ 2 | ¥ 13.5 |
Accounts Receivable (Details) -
Accounts Receivable (Details) - Schedule of accounts receivable - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Accounts Receivable [Abstract] | ||
Accounts receivable, gross | $ 7,429,904 | $ 5,009,547 |
Less: allowance for doubtful accounts | ||
Accounts receivable, net | $ 7,429,904 | $ 5,009,547 |
Notes Receivable (Details) - Sc
Notes Receivable (Details) - Schedule of notes receivable consisted - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of notes receivable consisted [Abstract] | ||
Total | $ 302,775 | $ 892,507 |
Due in the first quarter of 2022 [Member] | ||
Schedule of notes receivable consisted [Abstract] | ||
Total | 49,378 | |
Due in the second quarter of 2022 [Member] | ||
Schedule of notes receivable consisted [Abstract] | ||
Total | 761,537 | |
Due in the third quarter of 2022 [Member] | ||
Schedule of notes receivable consisted [Abstract] | ||
Total | 81,592 | |
Due in the first quarter of 2023 [Member] | ||
Schedule of notes receivable consisted [Abstract] | ||
Total | 116,280 | |
Due in the second quarter of 2023 [Member] | ||
Schedule of notes receivable consisted [Abstract] | ||
Total | 94,589 | |
Due in the third quarter of 2023 [Member] | ||
Schedule of notes receivable consisted [Abstract] | ||
Total | $ 91,906 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | |||
Inventory reserve | $ 3,011 |
Inventories, Net (Details) - Sc
Inventories, Net (Details) - Schedule of Inventories, net - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Inventories Net [Abstract] | ||
Raw materials | $ 896,766 | $ 664,329 |
Work in progress | 1,324,655 | 1,956,206 |
Finished goods | 399,022 | 354,914 |
Subtotal | 2,620,443 | 2,975,449 |
Reserve for obsolete inventory | (6,894) | (7,462) |
Total | $ 2,613,549 | $ 2,967,987 |
Prepaid Expense and Other Cur_3
Prepaid Expense and Other Current Assets (Details) - Schedule of prepaid expense and other current assets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Prepaid Expense and Other Current Assets [Abstract] | ||
Prepaid operating cost | $ 511,453 | $ 839,417 |
Prepaid service cost | 1,024,386 | 912,494 |
Deductible input VAT | 134,111 | |
Others | 68,295 | 108,985 |
Total | $ 1,604,134 | $ 1,995,007 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment, Net (Details) [Line Items] | |||
Depreciation expenses | $ 615,050 | $ 563,120 | $ 499,449 |
Cost of revenue | 13,274,752 | 14,058,830 | 6,706,303 |
Selling general and administrative expenses | 4,087,171 | 3,718,897 | 1,983,013 |
Property Plant And Equipment Net [Member] | |||
Property, Plant and Equipment, Net (Details) [Line Items] | |||
Cost of revenue | 546,305 | 507,072 | 354,618 |
Selling general and administrative expenses | $ 68,745 | $ 56,048 | $ 144,831 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details) - Schedule of property, plant and equipmen net - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 15,895,971 | $ 7,854,102 |
Less: accumulated depreciation | (3,595,480) | (3,230,949) |
Property, plant and equipment, net | 12,300,491 | 4,623,153 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 9,165,874 | 1,971,463 |
Machinery equipment and tools [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 5,158,903 | 4,867,159 |
Electronic devices [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 104,020 | 74,206 |
Office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 21,829 | 14,337 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 387,780 | 352,921 |
Construction in progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 1,057,565 | $ 574,016 |
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 expense | $ 29,618 | $ 22,715 | $ 21,236 |
Cost of revenues | 16,074 | 10,222 | 9,556 |
Selling, general and administrative expenses | $ 13,544 | $ 12,493 | $ 11,680 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of intangible assets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Intangible Assets [Abstract] | ||
Land use rights | $ 5,212,049 | $ 961,868 |
Less: accumulated amortization | (250,168) | (239,509) |
Intangible assets, net | $ 4,961,881 | $ 722,359 |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details) - Schedule of amortization of intangible assets | Dec. 31, 2022 USD ($) |
Schedule of Amortization of Intangible Assets [Abstract] | |
2023 | $ 115,400 |
2024 | 115,400 |
2025 | 115,400 |
2026 | 115,400 |
2027 | 115,400 |
Thereafter | 4,384,881 |
Total | $ 4,961,881 |
Loans (Details)
Loans (Details) ¥ in Millions | 1 Months Ended | 12 Months Ended | |||||||||||
Dec. 21, 2021 USD ($) | Dec. 21, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 CNY (¥) | Nov. 30, 2022 USD ($) | Nov. 30, 2022 CNY (¥) | Jul. 25, 2022 USD ($) | Jul. 25, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Aug. 31, 2021 USD ($) | Aug. 31, 2021 CNY (¥) | |
Loans [Abstract] | |||||||||||||
Aggregated amount | $ 6,690,000 | $ 5,940,000 | |||||||||||
Interest rates | 4.35% | 8% | |||||||||||
Short-term loans mature | 1 year | 1 year | |||||||||||
Secure short term loans | $ 3,040,000 | $ 3,290,000 | |||||||||||
Cumulative total | 314,000 | $ 725,000 | ¥ 5 | $ 3,400,000 | ¥ 23 | ¥ 2 | $ 1,600,000 | ¥ 10 | |||||
Annual effective interest rate | 6.80% | 5.70% | 5.70% | 6.20% | 6.20% | ||||||||
Total amount | 1,200,000 | ¥ 8 | |||||||||||
Secured loan | 2,000,000 | ¥ 13.5 | |||||||||||
Interest expense short term loan | 317,000 | 288,000 | $ 237,000 | ||||||||||
Borrow amount | $ 10,100,000 | ¥ 70 | |||||||||||
Properties and land amonut | 6,500,000 | ||||||||||||
Collaterals secure amount | $ 4,300,000 | ||||||||||||
Interest expense | $ 22,000 |
Loans (Details) - Schedule of s
Loans (Details) - Schedule of short-term loans consisted - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Short-Term Debt [Line Items] | |||
Short-term loans | $ 6,015,975 | $ 5,655,019 | |
Rural Commercial Bank of Shandong [Member] | |||
Short-Term Debt [Line Items] | |||
Short-term loans | [1],[2] | 2,754,301 | 2,981,280 |
Bank of Weifang [Member] | |||
Short-Term Debt [Line Items] | |||
Short-term loans | [2] | 470,729 | |
Postal Savings Bank of China (“PSBC”) [Member] | |||
Short-Term Debt [Line Items] | |||
Short-term loans | [2],[3] | 724,816 | 313,819 |
Industrial and Commercial Bank of China [Member] | |||
Short-Term Debt [Line Items] | |||
Short-term loans | [2] | 652,335 | 784,548 |
Shandong Heavy Industry Group Finance Co., Ltd. [Member] | |||
Short-Term Debt [Line Items] | |||
Short-term loans | [4] | 1,159,706 | 1,104,643 |
Bank of Beijing [Member] | |||
Short-Term Debt [Line Items] | |||
Short-term loans | [2] | 434,890 | |
Zheshang Bank [Member] | |||
Short-Term Debt [Line Items] | |||
Short-term loans | $ 289,927 | ||
[1]As of December 31, 2022 and 2021, properties recorded at approximately $3.04 million and $3.29 million, respectively, was pledged as collaterals to secure one of the short-term loans from Rural Commercial Bank of Shandong (see Note 7). In addition, the Company pledged its patents as collaterals to secure the other short-term loans from Rural Commercial Bank of Shandong.[2]The loans outstanding as of December 31, 2022 and 2021 that were matured were fully repaid upon their maturity.[3] The balance payable to the PSBC as of December 31, 2021 pertains to borrowings under a line of credit arrangements for purchase of raw materials, which allow the Company to borrow revolving loans, which, upon borrowing, reduce the amount available for other extensions of credit up to a cumulative total RMB2.0 million, or approximately $314,000, from November 30, 2021 to November 29, 2023, the agreement was terminated in November 2022. On November 30, 2022, the Company and two of its related parties, jointly entered into a line of credit loan agreement with PSBC, which allow the Company to borrow revolving loans, which, upon borrowing, reduce the amount available for other extensions of credit up to a cumulative total RMB5.0 million, or approximately $725,000, from November 30, 2022 to November 29, 2024. |
Loans (Details) - Schedule of f
Loans (Details) - Schedule of future maturities of the long-term loan | Dec. 31, 2022 USD ($) |
Schedule of Future Maturities of The Long Term Loan [Abstract] | |
2023 | $ 2,899,265 |
2024 | 2,899,265 |
2025 | 4,348,898 |
Total | $ 10,147,428 |
Security Deposit Received for_2
Security Deposit Received for Sales of Assets (Details) ¥ in Millions, $ in Millions | 1 Months Ended | |||||
Apr. 01, 2023 USD ($) | Apr. 01, 2023 CNY (¥) | May 31, 2023 USD ($) | May 31, 2023 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | |
Security Deposit Received for Sales of Assets (Details) [Line Items] | ||||||
Security deposit | $ 1.4 | ¥ 10 | ||||
Forecast [Member] | ||||||
Security Deposit Received for Sales of Assets (Details) [Line Items] | ||||||
Remaining balance | $ 0.4 | ¥ 2.5 | ||||
Business Combination [Member] | ||||||
Security Deposit Received for Sales of Assets (Details) [Line Items] | ||||||
Total consideration | $ 1.8 | ¥ 12.5 |
Accrued Expenses and Other Pa_3
Accrued Expenses and Other Payables (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | |
Payables and Accruals [Abstract] | |||
Lease year | 2 years | 2 years | |
Lease amount (in Yuan Renminbi) | ¥ | ¥ 100 | ||
Accrued expenses and other payables | $ 245,532 | $ 175,428 | |
Long-term payables | $ 42,220 | $ 378,799 |
Accrued Expenses and Other Pa_4
Accrued Expenses and Other Payables (Details) - Schedule of accrued expenses and other payables - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of accrued expenses and other payables [Abstract] | ||
Salary and welfare payable | $ 192,832 | $ 425,879 |
VAT and other taxes payables | 396,451 | 24,974 |
Interest payable | 34,565 | 1,898 |
Deferred revenue | 57,906 | 169,087 |
Other accrued expenses | 273,922 | 186,636 |
Total | $ 955,676 | $ 808,474 |
Leases (Details)
Leases (Details) | 12 Months Ended |
Dec. 31, 2022 CNY (¥) | |
Minimum [Member] | |
Leases (Details) [Line Items] | |
Lease term consideration | ¥ 0 |
Maximum [Member] | |
Leases (Details) [Line Items] | |
Lease term consideration | ¥ 100 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of lease expenses - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Finance lease Cost: | |||
Amortization of right-of-use assets | $ 10,744 | $ 115,954 | $ 162,611 |
Interest on lease liabilities | 28,549 | 20,207 | 10,415 |
Total finance lease cost | $ 39,293 | $ 136,161 | $ 173,026 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of supplemental cash flow information related to leases - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flow from finance leases | $ 28,549 | $ 20,207 | $ 10,415 |
Financing cash flow from finance leases | 581,549 | 770,242 | 119,014 |
Right-of-use assets obtained in exchange for lease obligations: | |||
Finance leases | $ 151,048 | $ 1,355,557 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of supplemental balance sheet information related to leases - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of supplemental balance sheet information related to leases [Abstract] | ||
Finance lease right-of-use assets | $ 1,299,217 | $ 1,372,169 |
Finance lease liabilities-current | 315,780 | 533,808 |
Finance lease liabilities, non-current | 46,623 | 292,130 |
Total finance lease liabilities | $ 362,403 | $ 825,938 |
Weighted-average remaining lease term (years) | 1 year 1 month 20 days | 2 years 7 days |
Weighted-average discount rate | 5.44% | 5.75% |
Leases (Details) - Schedule o_4
Leases (Details) - Schedule of maturity of our finance lease liabilities | Dec. 31, 2022 USD ($) |
Schedule of the following table summarizes the maturity of our finance lease liabilities [Abstract] | |
2023 | $ 326,081 |
2024 | 47,186 |
Total | 373,267 |
Less imputed interest | (10,864) |
Total lease liabilities | $ 362,403 |
Income Taxes (Details)
Income Taxes (Details) | 1 Months Ended | 12 Months Ended | ||
Mar. 16, 2007 | Dec. 31, 2022 HKD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | |
Income Taxes (Details) [Line Items] | ||||
Percentage of tax rate | 8.25% | |||
Profits amount (in Dollars) | $ 2,000,000 | |||
Percentage of profits | 16.50% | |||
Taxable income (in Dollars) | $ 2,000,000 | |||
Income tax liability | $ 15,000 | ¥ 100,000 | ||
PRC [Member] | ||||
Income Taxes (Details) [Line Items] | ||||
Percentage of unifrom rate | 25% | |||
Income tax rate percentage | 25% | |||
High and New Technology Enterprises [Member] | PRC [Member] | ||||
Income Taxes (Details) [Line Items] | ||||
Percentage of tax rate | 15% |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of current and deferred portions of income tax expense - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Current and Deferred Portions of Income Tax Expense [Abstract] | |||
Current tax provision | $ 264,467 | $ 263,080 | $ 239,496 |
Deferred tax provision | 15,602 | ||
Income tax expense | $ 280,069 | $ 263,080 | $ 239,496 |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of effective tax rate | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Effective Tax Rate [Abstract] | |||
PRC statutory income tax rate | 25% | 25% | 25% |
Effect of income tax exemptions and reliefs | (10.00%) | (10.00%) | (10.00%) |
Effect of deferred offering costs deducted for tax purpose | (1.00%) | ||
Effect of additional deduction allowed for tax purposes | (6.00%) | (6.00%) | (6.00%) |
Effective tax rate | 9% | 8% | 9% |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of deferred liability - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Deferred Liability [Abstract] | ||
Advance payment for professional service | $ 15,221 | |
Deferred tax liability | $ 15,221 |
Concentrations (Details)
Concentrations (Details) | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 | Dec. 31, 2022 CNY (¥) | |
Concentrations (Details) [Line Items] | ||||
Cash and cash equivalents (in Dollars) | $ 1,669,235 | $ 216,754 | ||
Bank deposit amount (in Yuan Renminbi) | 1,400,000 | ¥ 10,000,000 | ||
Concentration of Credit Risks [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Bank deposit amount (in Yuan Renminbi) | ¥ | ¥ 500,000 | |||
Cash held in bank (in Dollars) | $ 1,781,000 | $ 232,000 | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 10% | |||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 48% | 46% | 35% | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customer [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 19% | 23% | 27% | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customer [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 17% | |||
Revenue Benchmark [Member] | Product Concentration Risk [Member] | One Vendor [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 50% | 65% | 62% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 49% | 63% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customer [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 13% | 15% | ||
Accounts Payable [Member] | Product Concentration Risk [Member] | One Vendor [Member] | ||||
Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 37% | 47% |
Related Party (Details)
Related Party (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Related Party Transactions [Abstract] | |||
Advanced amount | $ 1,768,123 | $ 1,258,835 | $ 993,359 |
Repaid amount | $ 1,052,223 | $ 5,423,445 | $ 4,971,887 |
Related Party (Details) - Sched
Related Party (Details) - Schedule of related parties transactions | 12 Months Ended |
Dec. 31, 2022 | |
Jie Liu [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Jie Liu |
Nature of relationship | CEO of the Company |
Yuanqing Liu [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Yuanqing Liu |
Nature of relationship | Family member of the CEO, Father of the CEO |
Ronglan Sun [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Ronglan Sun |
Nature of relationship | Family member of the CEO, Mother of the CEO |
Hongyu Hao [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Hongyu Hao |
Nature of relationship | Family member of the CEO and Vice President of Purchase Department |
Huimin Lv [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Huimin Lv |
Nature of relationship | CEO assistant of the Company and Vice President of HR & Administration. |
Yuanxiang Liu [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Yuanxiang Liu |
Nature of relationship | Family member of the CEO, Uncle of the CEO |
Li Liu [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Li Liu |
Nature of relationship | Family member of the CEO, Sister of the CEO |
Yongqing Dong [Member] | |
Related Party Transaction [Line Items] | |
Name of the related parties | Yongqing Dong |
Nature of relationship | Family member of the CEO |
Related Party (Details) - Sch_2
Related Party (Details) - Schedule of amount due from a related party - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party (Details) - Schedule of amount due from a related party [Line Items] | ||
Due from related parties | $ 1,503 | |
Huimin Lv [Member] | ||
Related Party (Details) - Schedule of amount due from a related party [Line Items] | ||
Due from related parties | $ 1,503 |
Related Party (Details) - Sch_3
Related Party (Details) - Schedule of amount due to related parties - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party (Details) - Schedule of amount due to related parties [Line Items] | ||
Due to related parties | $ 607,236 | $ 120,980 |
Jie Liu [Member] | ||
Related Party (Details) - Schedule of amount due to related parties [Line Items] | ||
Due to related parties | 56,762 | 22,392 |
Hongyu Hao [Member] | ||
Related Party (Details) - Schedule of amount due to related parties [Line Items] | ||
Due to related parties | 545,054 | 73,850 |
Yuanqing Liu [Member] | ||
Related Party (Details) - Schedule of amount due to related parties [Line Items] | ||
Due to related parties | 22,328 | |
Yongqing Dong [Member] | ||
Related Party (Details) - Schedule of amount due to related parties [Line Items] | ||
Due to related parties | 5,362 | 2,410 |
Huimin Lv [Member] | ||
Related Party (Details) - Schedule of amount due to related parties [Line Items] | ||
Due to related parties | $ 58 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | Mar. 28, 2022 | May 02, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 01, 2022 | Sep. 13, 2022 | Dec. 31, 2021 | Feb. 09, 2021 |
Shareholders' Equity (Details) [Line Items] | ||||||||
Ordinary shares | 500,000,000 | 9,505,000 | 6,500,000 | 1,455,000 | 9,505,000 | 3 | ||
Par value per share (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||||||
Share issued | 17,999,900 | |||||||
Par value (in Dollars per share) | $ 0.0001 | |||||||
Share issued | 10,000,000 | 10,000,000 | ||||||
Dividend amount (in Dollars) | $ 50,000 | |||||||
Shares outstanding | 10,000,000 | 10,000,000 | ||||||
Gross proceeds (in Dollars) | $ 2,620,443 | $ 2,975,449 | ||||||
Net proceed (in Dollars) | $ 2,613,549 | $ 2,967,987 | ||||||
Ordinary Shares [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Ordinary shares | 1,500,000 | 97 | ||||||
Par value per share (in Dollars per share) | $ 0.0001 | |||||||
Share issued | 17,459,903 | |||||||
Subsequent Event [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Ordinary shares | 309,375 | |||||||
Par value per share (in Dollars per share) | $ 4 | |||||||
Gross proceeds (in Dollars) | $ 1,237,500 | $ 8,250,000 | ||||||
Net proceed (in Dollars) | $ 1,100,000 | $ 7,200,000 | ||||||
Subsequent Event [Member] | Public offering [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Ordinary shares | 2,062,500 | |||||||
Par value per share (in Dollars per share) | $ 4 | |||||||
Hongli Technology [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Ordinary shares | 495,000 | 45,000 | 495,000 | |||||
Share issued | 539,997 |
Surplus Reserve (Details)
Surplus Reserve (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Surplus Reserve [Abstract] | ||
Tax net profits percentage | 10% | |
Statutory reserve percentage | 50% | |
Statutory reserve | $ 370,683 | $ 370,683 |
Commitment (Details)
Commitment (Details) ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||
May 05, 2023 USD ($) | May 05, 2023 CNY (¥) | Nov. 30, 2020 USD ($) | Nov. 30, 2020 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2023 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Jun. 13, 2022 USD ($) | Jun. 13, 2022 CNY (¥) | |
Commitment (Details) [Line Items] | ||||||||||||
Total consideration | $ 18.1 | ¥ 125 | ||||||||||
Deposit | $ 2.2 | ¥ 15 | ||||||||||
Annual interest | 7% | 7% | ||||||||||
Interest expense | 1.1 | 7.8 | ||||||||||
Facilities and infrastructure consideration | $ 12.4 | ¥ 85.2 | ||||||||||
Total paid | $ 15.9 | ¥ 109.6 | ||||||||||
Prepayment for purchase | 3.5 | 24.4 | ||||||||||
Remaining payments | $ 6 | ¥ 41.8 | ||||||||||
Offering and working capital, percentage | 30% | 30% | ||||||||||
Payment | $ 6 | ¥ 41.8 | ||||||||||
Immaterial Asset Acquisitions [Member] | ||||||||||||
Commitment (Details) [Line Items] | ||||||||||||
Acquisition price | $ 6.8 | ¥ 47 | $ 7.5 | ¥ 52 | ||||||||
Forecast [Member] | ||||||||||||
Commitment (Details) [Line Items] | ||||||||||||
Total consideration | $ 21.9 | ¥ 151.4 | ||||||||||
Annual interest | 7% | 7% | ||||||||||
Forecast [Member] | Immaterial Asset Acquisitions [Member] | ||||||||||||
Commitment (Details) [Line Items] | ||||||||||||
Acquisition price | $ 1.6 | ¥ 11 |
Restricted Net Assets or Pare_3
Restricted Net Assets or Parent Company's Condensed Financial Statements (Details) - Schedule of amounts restricted include paid-in capital, additional paid-in capital, and the statutory reserves - Previously Reported [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of amounts restricted include paid-in capital, additional paid-in capital, and the statutory reserves [Abstract] | |||
Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 10,000,000 shares issued and outstanding as of December 31, 2022 and 2021 | [1] | $ 1,000 | $ 1,000 |
Additional paid-in capital | 609,601 | 609,601 | |
Statutory reserves | 370,683 | 370,683 | |
Total restricted net assets | $ 981,284 | $ 981,284 | |
[1]The share amounts are presented on a retroactive basis |
Restricted Net Assets or Pare_4
Restricted Net Assets or Parent Company's Condensed Financial Statements (Details) - Schedule of amounts restricted include paid-in capital, additional paid-in capital, and the statutory reserves (Parentheticals) - Previously Reported [Member] - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of amounts restricted include paid-in capital, additional paid-in capital, and the statutory reserves [Abstract] | |||
Ordinary shares, par value (in Dollars per share) | [1] | $ 0.0001 | $ 0.0001 |
Ordinary shares, shares authorized | [1] | 500,000,000 | 500,000,000 |
Ordinary shares, shares issued | [1] | 10,000,000 | 10,000,000 |
Ordinary shares, shares outstanding | [1] | 10,000,000 | 10,000,000 |
[1]The share amounts are presented on a retroactive basis |
Subsequent Events (Details)
Subsequent Events (Details) - SUBSEQUENT EVENTS [Member] | 1 Months Ended | |||||||||||||||||||
Apr. 30, 2023 USD ($) | Apr. 30, 2023 CNY (¥) | Apr. 28, 2023 USD ($) | Apr. 28, 2023 CNY (¥) | Apr. 23, 2023 USD ($) | Apr. 23, 2023 CNY (¥) | Apr. 21, 2023 USD ($) | Apr. 21, 2023 CNY (¥) | Mar. 20, 2023 USD ($) | Mar. 09, 2023 USD ($) | Jan. 06, 2023 USD ($) | Feb. 14, 2023 USD ($) | Apr. 30, 2023 CNY (¥) | Apr. 28, 2023 CNY (¥) | Apr. 23, 2023 CNY (¥) | Apr. 21, 2023 CNY (¥) | Mar. 20, 2023 CNY (¥) | Mar. 09, 2023 CNY (¥) | Feb. 14, 2023 CNY (¥) | Jan. 06, 2023 CNY (¥) | |
Subsequent Events (Details) [Line Items] | ||||||||||||||||||||
Borrow amount | $ 4,100,000 | $ 2,000,000 | $ 1,450,000 | $ 7,200,000 | $ 700,000 | $ 700,000 | $ 400,000 | $ 100,000 | ¥ 28,000,000 | ¥ 14,000,000 | ¥ 10,000,000 | ¥ 49,800,000 | ¥ 5,000,000 | ¥ 4,500,000 | ¥ 1,000,000 | ¥ 3,000,000 | ||||
Maturity date | Apr. 27, 2026 | Apr. 27, 2026 | Apr. 22, 2026 | Apr. 22, 2026 | Apr. 20, 2026 | Apr. 20, 2026 | Mar. 20, 2024 | Mar. 08, 2024 | Jan. 06, 2024 | Feb. 14, 2024 | ||||||||||
Fixed interest rate | 4.10% | 4% | 2% | 7% | 4.35% | 4.30% | 5.50% | 4.10% | 4% | 2% | 7% | 4.35% | 5.50% | 4.30% | ||||||
Instalment amount | $ 2,000,000 | ¥ 13,940,000 | $ 1,400,000 | ¥ 9,500,000 | $ 7,200,000 | ¥ 49,750,000 | ||||||||||||||
Annual report amount | $ 2,800,000 | ¥ 19,300,000 | ||||||||||||||||||
First Five Instalments [Member] | ||||||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||||||
Instalment amount | $ 10,000 | ¥ 100,000 | $ 1,450 | ¥ 10,000 | ||||||||||||||||
First Six Instalments [Member] | ||||||||||||||||||||
Subsequent Events (Details) [Line Items] | ||||||||||||||||||||
Instalment amount | $ 1,450 | ¥ 10,000 |