Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 14, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | SORL Auto Parts Inc | |
Entity Central Index Key | 714,284 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | SORL | |
Entity Common Stock, Shares Outstanding | 19,304,921 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 7,489,967 | $ 30,230,828 |
Net accounts receivable, including $1,224,333 and $0 accounts receivable from related party at September 30, 2016 and December 31, 2015, respectively. | 84,491,142 | 71,823,328 |
Bank acceptance notes from customers | 44,328,289 | 22,870,791 |
Short term investments | 0 | 61,007,709 |
Inventories | 63,879,154 | 73,661,860 |
Prepayments | 8,720,473 | 3,350,607 |
Prepaid capital lease interest | 6,991 | 93,458 |
Restricted cash | 4,938,600 | 785,999 |
Other current assets, net | 1,548,764 | 1,241,864 |
Deferred tax assets | 4,041,524 | 2,909,729 |
Total Current Assets | 219,444,904 | 267,976,173 |
Property, plant and equipment, net | 52,087,620 | 37,561,905 |
Land use rights, net | 8,686,365 | 13,232,149 |
Intangible assets, net | 14,711 | 23,854 |
Security deposits on lease agreement | 855,714 | 1,759,975 |
Total Non-Current Assets | 61,644,410 | 52,577,883 |
Total Assets | 281,089,314 | 320,554,056 |
Current Liabilities | ||
Accounts payable and bank acceptance notes to vendors, including $5,582,717 and $1,133,537 due to related parties at September 30, 2016 and December 31, 2015, respectively. | 52,363,883 | 35,292,277 |
Deposit received from customers | 23,557,397 | 20,012,087 |
Short term bank loans | 25,133,254 | 23,367,207 |
Income tax payable | 1,125,201 | 0 |
Accrued expenses | 16,688,831 | 13,870,587 |
Capital lease obligations | 855,714 | 3,519,949 |
Other current liabilities, including $177,603 and $0 payables to related party at September 30, 2016 and December 31, 2015, respectively | 2,201,334 | 2,067,449 |
Total Current Liabilities | 121,925,614 | 98,129,556 |
Total Liabilities | 121,925,614 | 98,129,556 |
Equity | ||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of September 30, 2016 and December 31, 2015 | 0 | 0 |
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of September 30, 2016 and December 31, 2015 | 38,609 | 38,609 |
Additional paid-in capital | (28,582,654) | 42,199,014 |
Reserves | 14,541,184 | 13,207,972 |
Accumulated other comprehensive income | 11,523,318 | 15,662,639 |
Retained earnings | 138,629,990 | 129,055,099 |
Total SORL Auto Parts, Inc. Stockholders' Equity | 136,150,447 | 200,163,333 |
Noncontrolling Interest In Subsidiaries | 23,013,253 | 22,261,167 |
Total Equity | 159,163,700 | 222,424,500 |
Total Liabilities and Equity | $ 281,089,314 | $ 320,554,056 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Accounts receivable, related party | $ 1,224,333 | $ 0 |
Accounts payable, related party | 5,582,717 | 1,133,537 |
Other current liabilities, related party | $ 177,603 | $ 0 |
Preferred stock, par or stated value per share | $ 0 | $ 0 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.002 | $ 0.002 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 19,304,921 | 19,304,921 |
Common stock, shares outstanding | 19,304,921 | 19,304,921 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net sales | $ 61,878,492 | $ 50,323,832 | $ 189,250,952 | $ 161,796,676 |
Include: sales to related parties | 1,785,443 | 2,171,824 | 8,334,394 | 4,241,472 |
Cost of sales | 43,240,780 | 36,228,783 | 133,540,473 | 116,533,620 |
Gross profit | 18,637,712 | 14,095,049 | 55,710,479 | 45,263,056 |
Expenses: | ||||
Selling and distribution expenses | 7,949,947 | 4,813,129 | 20,637,464 | 15,250,216 |
General and administrative expenses | 4,878,979 | 5,634,735 | 16,717,966 | 15,784,330 |
Research and development expenses | 2,409,891 | 2,261,665 | 6,533,540 | 5,831,756 |
Total operating expenses | 15,238,817 | 12,709,529 | 43,888,970 | 36,866,302 |
Other operating income, net | 334,845 | 69,480 | 694,717 | 229,801 |
Income from operations | 3,733,740 | 1,455,000 | 12,516,226 | 8,626,555 |
Interest income | 33,979 | 162,770 | 1,047,667 | 683,561 |
Government grants | 424,029 | 150,177 | 569,041 | 176,157 |
Other income | 212,513 | 1,675,000 | 763,534 | 2,517,901 |
Interest expenses | (214,974) | (395,121) | (515,547) | (804,321) |
Other expenses | (155,261) | (198,828) | (582,820) | (884,879) |
Income before income taxes | 4,034,026 | 2,848,998 | 13,798,101 | 10,314,974 |
Income taxes provision | 435,534 | 427,905 | 1,677,987 | 2,220,327 |
Net income | 3,598,492 | 2,421,093 | 12,120,114 | 8,094,647 |
Net income attributable to noncontrolling interest in subsidiaries | 359,849 | 373,067 | 1,212,011 | 734,265 |
Net income attributable to common stockholders | 3,238,643 | 2,048,026 | 10,908,103 | 7,360,382 |
Comprehensive income: | ||||
Net income | 3,598,492 | 2,421,093 | 12,120,114 | 8,094,647 |
Foreign currency translation adjustments | (1,109,719) | (8,972,031) | (4,599,246) | (8,790,448) |
Comprehensive income (loss) | 2,488,773 | (6,550,938) | 7,520,868 | (695,801) |
Comprehensive income (loss) attributable to noncontrolling interest in subsidiaries | 248,877 | (524,189) | 752,086 | (160,294) |
Comprehensive income (loss) attributable to common shareholders | $ 2,239,896 | $ (6,026,749) | $ 6,768,782 | $ (535,507) |
Weighted average common share - basic | 19,304,921 | 19,304,921 | 19,304,921 | 19,304,921 |
Weighted average common share - diluted | 19,304,921 | 19,304,921 | 19,304,921 | 19,304,921 |
EPS - basic | $ 0.17 | $ 0.11 | $ 0.57 | $ 0.38 |
EPS - diluted | $ 0.17 | $ 0.11 | $ 0.57 | $ 0.38 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows From Operating Activities | ||
Net Income | $ 12,120,114 | $ 8,094,647 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Allowance for doubtful accounts | 6,328,318 | 6,817,520 |
Depreciation and amortization | 5,357,366 | 5,765,138 |
Deferred income tax | (1,253,285) | (1,838,158) |
Gain on disposal of property and equipment | 0 | (44,486) |
Changes in assets and liabilities: | ||
Accounts receivable | (21,237,420) | (7,700,931) |
Bank acceptance notes from customers | (22,588,093) | 5,653,836 |
Other currents assets | (360,110) | (8,665) |
Inventories | 8,225,129 | 13,369,960 |
Prepayments | (5,240,758) | (536,193) |
Prepaid capital lease interest | 86,777 | 227,367 |
Accounts payable and bank acceptance notes to vendors | 15,400,637 | 1,381,794 |
Income tax payable | 1,153,011 | 434,069 |
Deposits received from customers | 4,217,264 | 8,243,799 |
Other current liabilities and accrued expenses | 1,086,934 | (874,410) |
Net Cash Flows Provided by Operating Activities | 3,295,884 | 38,985,287 |
Cash Flows From Investing Activities | ||
Change in short term investments | 60,567,408 | (54,985,353) |
Acquisition of property, equipment, plant and land use right | (12,266,591) | (2,440,511) |
Change in restricted cash | (4,193,003) | 0 |
Proceeds from disposal of property and equipment | 0 | 48,956 |
Advance to related party | (18,247,384) | 0 |
Repayment of advance to related party | 18,247,384 | 0 |
Net Cash Flows Provided by (Used in) Investing Activities | 44,107,814 | (57,376,908) |
Cash Flows From Financing Activities | ||
Proceeds from bank loans | 39,309,937 | 32,886,768 |
Repayment of bank loans | (37,110,783) | (19,626,376) |
Repayment of capital lease | (1,779,040) | (2,780,713) |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | (70,781,668) | 0 |
Net Cash Flows Provided by (Used in) Financing Activities | (70,361,554) | 10,479,679 |
Effects on changes in foreign exchange rate | 216,995 | (354,822) |
Net change in cash and cash equivalents | (22,740,861) | (8,266,764) |
Cash and cash equivalents- beginning of the period | 30,230,828 | 14,009,597 |
Cash and cash equivalents - end of the period | 7,489,967 | 5,742,833 |
Supplemental Cash Flow Disclosures: | ||
Interest paid | 575,349 | 815,839 |
Income taxes paid | 2,340,720 | 3,624,319 |
Non-cash Investing and Financing Transactions | ||
Transfer of Plant and Land Use Right to Entity Under Common Control | 17,342,372 | 0 |
Liabilities assumed in connection with the plant and land use right exchange | $ 5,351,196 | $ 0 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - 9 months ended Sep. 30, 2016 - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Reserves [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] | Stockholders' Equity [Member] | Non-controlling Interest [Member] |
Balance at Dec. 31, 2015 | $ 222,424,500 | $ 38,609 | $ 42,199,014 | $ 13,207,972 | $ 129,055,099 | $ 15,662,639 | $ 200,163,333 | $ 22,261,167 |
Balance, shares at Dec. 31, 2015 | 19,304,921 | 19,304,921 | ||||||
Net income | $ 12,120,114 | $ 0 | 0 | 0 | 10,908,103 | 0 | 10,908,103 | 1,212,011 |
Foreign currency translation adjustment | (4,599,246) | 0 | 0 | 0 | 0 | (4,139,321) | (4,139,321) | (459,925) |
Distribution to controlling shareholders in connection with plant and land use rights exchange with entity under common control | (70,781,668) | 0 | (70,781,668) | 0 | 0 | 0 | (70,781,668) | 0 |
Transfer to reserve | 0 | 0 | 0 | 1,333,212 | (1,333,212) | 0 | 0 | 0 |
Balance at Sep. 30, 2016 | $ 159,163,700 | $ 38,609 | $ (28,582,654) | $ 14,541,184 | $ 138,629,990 | $ 11,523,318 | $ 136,150,447 | $ 23,013,253 |
Balance, shares at Sep. 30, 2016 | 19,304,921 | 19,304,921 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2016 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | SORL Auto Parts, Inc. (together with its subsidiaries, “we,” “us,” “our” or the “Company” or “SORL”), a Delaware corporation incorporated on March 24, 1982, is principally engaged in the manufacture and distribution of vehicle brake systems and other key safety-related components, through its 90 The Joint Venture was formed in the People’s Republic of China (“PRC” or “China”) as a Sino-Foreign joint venture on January 17, 2004, pursuant to the terms of a Joint Venture Agreement between the Ruili Group Co., Ltd. (the “Ruili Group”), a related party under common control, and Fairford Holdings Limited (“Fairford”), a wholly owned subsidiary of the Company. The Ruili Group was incorporated in China in 1987 and specializes in the development, production and sale of various kinds of automotive parts. Fairford and the Ruili Group contributed 90 10 On November 11, 2009, the Company, through its wholly owned subsidiary, Fairford, entered into a joint venture agreement with MGR Hong Kong Limited (“MGR”), a Hong Kong-based global auto parts distribution specialist firm and an unaffiliated Taiwanese investor. The joint venture was named SORL International Holding, Ltd. (“SIH”) based in Hong Kong. SORL held a 60 30 10 On May 5, 2016, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with the Ruili Group through Ruian, a related party under common control, pursuant to which the Company agreed to purchase the land use rights and factory facilities located at No. 2666 Kaifaqu Avenue, Rui’an Economic Development Zone, Rui’an City, Zhejiang Province, the People’s Republic of China (the “Development Zone Facility”). In exchange for the Development Zone Facility, the Company agree to transfer to the Ruili Group the land use rights and factory facilities of the Dongshan Facility that Ruian currently owns, plus RMB 501,000,000 76,533,000 58,714 157,619 The cash consideration in the amount of RMB 481,000,000 73,478,000 20,000,000 3,016,000 89,229 |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE B - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (1) BASIS OF PRESENTATION The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted as permitted by the rules and regulations of the United States Securities and Exchange Commission (“SEC”), although the Company believes that the disclosures contained in this report are adequate to make the information presented not misleading. The consolidated balance sheet information as of December 31, 2015 was derived from the consolidated audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. These consolidated financial statements should be read in conjunction with the annual consolidated audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and other reports filed with the SEC. The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. (2) SIGNIFICANT ACCOUNTING POLICIES The Company uses the accrual method of accounting for financial statement and tax return purposes. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates. For certain of the Company’s financial instruments, including cash and cash equivalents, short term investments, trade receivables and payables, prepaid expenses, deposits and other current assets, short-term bank borrowings, and other payables and accruals, the carrying amounts approximate fair values due to their short maturities. 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. The Company’s short term investments include term deposits with an original maturity from three months to one year with financial institutions. Term deposit in the amount of $ 3,317,650 22,000,000 January 13, 2016 July 13, 2016 Term deposits in the amount of $ 21,667,802 140,000,000 March 24, 2015 March 24, 2016 Term deposit in the amount of $ 6,190,800 40,000,000 December 17, 2015 June 17, 2016 Restricted cash mainly represents bank deposits used to pledge the bank acceptance notes. The Company entered into credit agreements with commercial banks in China (“endorsing banks”) which agree to provide credit within stipulated limits. Within the stipulated credit limits, the Company can issue bank acceptance notes to its suppliers as payments for the purchases. In order to issue bank acceptance notes, the Company is generally required to make initial deposits or pledge note receivables to the endorsing banks in amounts of certain percentage of the face amount of the bank acceptance notes to be issued by the Company. The cash in such accounts is restricted for use over the terms of the bank acceptance notes, which are normally three to six months. A related party is generally defined as (i) any person that holds 10 Notes receivable generally due within one year are issued by some customers to pay certain outstanding receivable balances to the Company with specific payment terms and definitive due dates. Notes receivable do not bear interest. As of September 30, 2016 and December 31, 2015, notes receivables in the amount of $ 31,288,866 13,647,583 Revenue from the sale of goods is recognized when the risks and rewards of ownership of the goods have transferred to the buyer. The transfer is decided by several factors, including factors such as when persuasive evidence of an arrangement exits, delivery has occurred, the sales price is fixed and determinable, and collection is probable. Revenue consists of the invoice value for the sale of goods and services net of value-added tax, rebates and discounts and returns. The Company nets sales return in gross revenue, i.e., the revenue shown in the income statement is the net sales. Cost of sales consists primarily of materials costs, applicable local government levies, freight charges, purchasing and receiving costs, inspection costs, employee compensation, depreciation and related costs, which are directly attributable to production. Write-down of inventories to lower of cost or market is also recorded in cost of sales, if any. The Company maintains its books and accounting records in RMB, the currency of the PRC. The Company’s functional currency is also RMB. The Company has adopted FASB ASC 830-30 in translating financial statement amounts from RMB to the Company’s reporting currency, United States dollars (“US$”). All assets and liabilities are translated at the current rate. The shareholders’ equity accounts are translated at the appropriate historical rate. Revenue and expenses are translated at the weighted average rates in effect on the transaction dates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. During the three and nine months ended September 30, 2016, the Company had $ 43,418 320,019 1,268,968 1,346,440 Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. |
RECENTLY ISSUED ACCOUNTING PRON
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2016 | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE C RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”. The amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by amending certain existing illustrative examples and adding additional illustrative examples to assist in the application of the guidance. The effective date and transition of these amendments is the same as the effective date and transition of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. Public entities should apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In April 2016, the FASB issued ASU 2016- 10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. The amendments add further guidance on identifying performance obligations and also to improve the operability and understandability of the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting”. The amendments rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: (1) Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2; (2) Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1; (3) Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and (4) Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5. The amendment is effective upon adoption of ASU 2014-09. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”. The amendments, among other things: (1) clarify the objective of the collectibility criterion for applying paragraph 606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. These amendments are effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. These amendments provide cash flow statement classification guidance for: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; (6) Distributions Received from Equity Method Investees; (7) Beneficial Interests in Securitization Transactions; and (8) Separately Identifiable Cash Flows and Application of the Predominance Principle. These amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted, including adoption in an interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In September 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”. These amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a variable interest entity), the amendments require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a variable interest entity and, on a proportionate basis, its indirect variable interests in a variable interest entity held through related parties, including related parties that are under common control with the reporting entity. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity adopts the pending content that links to this paragraph in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE D - RELATED PARTY TRANSACTIONS The Company continues to purchase primarily packaging materials from the Ruili Group. The Ruili Group is the minority stockholder of Joint Venture and is collectively controlled by Mr. Xiao Ping Zhang, his wife Ms. Shu Ping Chi, and his brother Mr. Xiao Feng Zhang. In addition, the Company purchases automotive components from three other related parties, Guangzhou Ruili Kormee Automotive Electronic Co., Ltd. (“Guangzhou Kormee”), Ruian Kormee Vehicle Brake Co., Ltd. (“Ruian Kormee”) and Shanghai Dachao Electric Technology Co., Ltd. (“Shanghai Dachao”). Guangzhou Kormee is controlled by the Ruili Group and Ruian Kormee is the wholly-owned subsidiary of Guangzhou Kormee. Ruili Group owns 49 18,247,384 177,603 Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 PURCHASES FROM: Guangzhou Kormee $ 138,580 $ 957,017 $ 826,474 $ 1,331,566 Ruian Kormee 450,665 202,924 807,769 680,983 Ruili Group Co., Ltd. 1,027,210 751,044 2,972,963 2,379,870 Shanghai Dachao 82,671 116,415 Total Purchases $ 1,699,126 $ 1,910,985 $ 4,723,621 $ 4,392,419 SALES TO: Guangzhou Kormee $ 1,529,583 $ 145,564 $ 3,174,040 $ 408,334 Ruian Kormee 2,327 573 30,077 Ruili Group Co., Ltd. 1,785,443 2,171,824 8,334,394 4,241,472 Total Sales $ 3,315,026 $ 2,319,715 $ 11,509,007 $ 4,679,883 The sales to Guangzhou Kormee and Ruian Kormee mentioned above represent sales of scrap materials and the related operating results were included in other operating income, net in the consolidated statements of income and comprehensive income. The sales to Ruili Group were included in sales in the consolidated statements of income and comprehensive income. September 30, December 31, 2016 2015 ACCOUNTS RECEIVABLE FROM RELATED PARTY Guangzhou Kormee $ 1,224,333 $ Total $ 1,224,333 $ ACCOUNTS PAYABLE TO RELATED PARTIES Ruian Kormee $ 1,024,909 $ 340,175 Guangzhou Kormee 75,968 Ruili Group Co., Ltd. 4,506,659 697,643 Shanghai Dachao 51,149 19,751 Total $ 5,582,717 $ 1,133,537 OTHER PAYBLES TO RELATED PARTY Ruili Group Co., Ltd. $ 177,603 $ Total $ 177,603 $ The Company entered into several lease agreements with related parties, see Note K for more details. In addition, the Company pledged a 6-month fixed term deposit of RMB 22,000,000 3,317,650 July 13, 2016 The Company provided a guarantee for credit line granted to Ruili Group by Bank of Ningbo in a maximum amount of RMB 168,000,000 25,871,627 March 24, 2015 March 24, 2016 The Company provided a guarantee for the credit line granted to Ruili Group by China Everbright Bank in the amount of RMB 60,000,000 9,239,867 February 26, 2015 The Company provided a guarantee for the credit line granted to Ruili Group by China Guangfa Bank in the amount of RMB 54,000,000 8,315,880 September 22, 2015 The Company provided a guarantee for the credit line granted to Ruili Group by the China Merchants Bank in the amount of RMB 50,000,000 7,699,889 July 29, 2015 The Company pledged its term deposit of RMB 40,000,000 6,159,911 December 17, 2015 June 17, 2016 The Company provided a guarantee for the credit line granted to Ruili Group by the Bank of Ningbo in the amount of RMB 108,000,000 17,182,404 August 22, 2014 August 21, 2015 On May 5, 2016, the Company entered into the Purchase Agreement with the Ruili Group to purchase Development Zone Facility, in exchange for which, the Company would transfer to the Ruili Group the Dongshan Facility plus RMB 501,000,000 77,540,000 481,000,000 74,444,000 20,000,000 3,016,000 89,229 |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE E - ACCOUNTS RECEIVABLE September 30, December 31, 2016 2015 Accounts receivable $ 102,320,042 $ 83,898,730 Less: allowance for doubtful accounts (17,828,900) (12,075,402) Accounts receivable, net $ 84,491,142 $ 71,823,328 No customer individually accounted for more than 10% of our revenues or accounts receivable for the nine months ended September 30, 2016. The changes in the allowance for doubtful accounts on September 30, 2016 and December 31, 2015 are summarized as follows: September 30, December 31, 2016 2015 Beginning balance $ 12,075,402 $ 6,475,587 Add: increase to allowance 5,753,498 5,599,815 Less: accounts written off Ending balance $ 17,828,900 $ 12,075,402 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2016 | |
INVENTORIES [Abstract] | |
INVENTORIES | NOTE F - INVENTORIES On September 30, 2016 and December 31, 2015, inventories consisted of the following: September 30, December 31, 2016 2015 Raw materials $ 11,860,248 $ 13,038,945 Work in process 24,940,909 28,786,709 Finished goods 27,077,997 31,836,206 Total inventories 63,879,154 $ 73,661,860 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2016 | |
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE G - PROPERTY, PLANT AND EQUIPMENT September 30, December 31, 2016 2015 Machinery $ 58,816,765 $ 50,680,639 Molds 1,306,664 1,343,730 Office equipment 2,089,076 2,077,411 Vehicles 2,159,443 1,983,028 Buildings 16,441,055 7,756,917 Machinery held under capital lease 26,728,626 29,012,601 Leasehold improvements 476,365 489,878 Sub-Total 108,017,994 93,344,204 Less: accumulated depreciation (55,930,374) (55,782,299) Property, plant and equipment, net $ 52,087,620 $ 37,561,905 Depreciation expense charged to operations were $ 5,110,014 5,421,040 On September 28, 2007, the Company purchased the Dongshan Facility from Ruili Group for an aggregate purchase price of approximately RMB 152 20 154 20.4 69.4 9.1 Company's On May 5, 2016, the Company entered into a Purchase Agreement with the Ruili Group through Ruian, pursuant to which the Company agreed to exchange the Dongshan Facility plus RMB 501 76.5 125 19.1 626 95.6 15.03 2.3 3 481 73.5 20 3.0 Since the Purchase Agreement was entered into between entities under common control, the transaction was recorded at historical costs. The excess of total cash consideration over the difference between the carrying value of assets received and assets transferred to Ruili Group, a related party controlled by Mr. Xiao Ping Zhang, his wife Ms. Shu Ping Chi, and his brother Mr. Xiao Feng Zhang, was reflected as a reduction of shareholders’ equity. |
DEFERRED TAX ASSETS AND DEFERRE
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | 9 Months Ended |
Sep. 30, 2016 | |
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES [Abstract] | |
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES | NOTE H - DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES September 30, December 31, 2016 2015 Deferred tax assets - current Allowance for doubtful accounts $ 2,750,252 $ 1,860,379 Revenue (net of cost) 5,974 45,815 Unpaid accrued expenses 333,707 180,174 Warranty 951,591 875,751 Deferred tax assets 4,041,524 2,962,119 Valuation allowance Net deferred tax assets - current $ 4,041,524 $ 2,962,119 Deferred tax liabilities - current Revenue (net of cost) $ $ Others 52,390 Deferred tax liabilities - current 52,390 Net deferred tax assets - current $ 4,041,524 $ 2,909,729 Deferred taxation is calculated under the liability method in respect of taxation effect arising from all timing differences, which are expected with reasonable probability to realize in the foreseeable future. The Company and its subsidiaries do not have income tax liabilities in the U.S. as the Company had no taxable income for the reporting period. The Company’s subsidiary registered in the PRC is subject to income taxes within the PRC at the applicable tax rate. |
SHORT-TERM BANK LOANS
SHORT-TERM BANK LOANS | 9 Months Ended |
Sep. 30, 2016 | |
SHORT-TERM BANK LOANS [Abstract] | |
SHORT-TERM BANK LOANS | NOTE I SHORT-TERM BANK LOANS September 30, December 31, 2016 2015 Secured $ 25,133,254 $ 23,367,207 The Company obtained those short term loans from Bank of China, Bank of Ningbo, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China, respectively, to finance general working capital as well as new equipment acquisition. Interest rate for the loans outstanding during the nine months ended September 30, 2016 ranged from 0.55 4.57 November 1, 2016 to September 21, 2017. 6,609,505 15,836,158 214,974 213,797 515,547 373,518 Corporate or personal guarantees: $ 2,926,113 Pledged by Ruili Group, a related party, with its land and buildings, and guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal shareholders. $ 2,065,051 Pledged by Ruili Group, a related party, with its land and buildings, and guaranteed by Ruili Group, a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal shareholders. $ 11,481,326 Guaranteed by Ruili Group, a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 2,388,511 Pledged by Ruili Group, a related party, with its land and buildings. $ 6,272,252 Guaranteed by Ruili Group, a related party. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE J - INCOME TAXES The Joint Venture is registered in the PRC, and is therefore subject to state and local income taxes within the PRC at the applicable tax rate on the taxable income as reported in the PRC statutory financial statements in accordance with relevant income tax laws. In 2015, the Joint Venture was awarded the Chinese government's "High-Tech Enterprise" designation for a third time, which is valid for three years and it continues to be taxed at the 15% tax rate in 2015, 2016 and 2017. Nine Months Ended Nine Months Ended September 30, 2016 September 30, 2015 US Statutory income tax rate 35.00 % 35.00 % Valuation allowance recognized with respect to the loss in the US company -35.00 % -35.00 % Hong Kong Statutory income tax rate 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in the Hong Kong company -16.50 % -16.50 % China Statutory income tax rate 25.00 % 25.00 % Effects of income tax exemptions and reliefs -10.0 % - % Effects of additional deduction allowed for R&D expenses -3.54 % -7.07 % Other items 0.70 % 3.60 % Effective tax rate 12.16 % 21.53 % Income taxes are calculated on a separate entity basis. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. There currently is no tax benefit recorded for the United States. The tax authority may examine the tax returns of the Company three years after the year ended December 31, 2015. In the nine months ended September 30, 2016, there were no penalties and interest, which generally are recorded in the general and administrative expenses or in the tax expenses. Nine Months Ended Nine Months Ended Current $ 2,942,048 $ 4,058,485 Deferred (1,264,061) (1,838,158) Total $ 1,677,987 $ 2,220,327 ASC 740-10 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax positions and considered that no provision for uncertainty in income taxes was necessary as of September 30, 2016 and December 31, 2015. |
OPERATING LEASES WITH RELATED P
OPERATING LEASES WITH RELATED PARTIES | 9 Months Ended |
Sep. 30, 2016 | |
OPERATING LEASES WITH RELATED PARTIES [Abstract] | |
OPERATING LEASES WITH RELATED PARTIES | NOTE K OPERATING LEASES WITH RELATED PARTIES In December 2006, Ruian entered into a lease agreement with Ruili Group for the lease of two apartment buildings. These two apartment buildings are for Ruian’s management personnel and staff, respectively. The lease term is from January 2013 to December 2016. This lease was amended in 2013, with a new lease term from January 1, 2013 to December 31, 2022. The annual lease expense is RMB 2,100,000 333,688 In May 2009, Ruian entered into a lease agreement with Ruili Group for the lease of a manufacturing plant. The lease term is from September 2009 to May 2017. In August 2010, a new lease agreement was signed between Ruian and Ruili Group, under which Ruian leased 89,229 8,137,680 1,293,070 The lease expenses were $ 1,402,658 1,245,477 |
WARRANTY CLAIMS
WARRANTY CLAIMS | 9 Months Ended |
Sep. 30, 2016 | |
WARRANTY CLAIMS [Abstract] | |
WARRANTY CLAIMS | NOTE L - WARRANTY CLAIMS Warranty claims were $ 1,741,415 1,515,278 Beginning balance at January 1, 2016 $ 5,838,343 Aggregate increase for new warranties issued during current period 1,741,415 Aggregate reduction for payments made (1,235,817) Ending balance on September 30, 2016: $ 6,343,941 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
SEGMENT INFORMATION [Abstract] | |
SEGMENT INFORMATION | NOTE M SEGMENT INFORMATION The Company produces brake systems and other related components for different types of commercial vehicles (“Commercial Vehicle Brake Systems”). On August 31, 2010, the Company through Ruian, executed an Asset Purchase Agreement to acquire, and purchased, a segment of the passenger vehicle auto parts business (“Passenger Vehicle Brake Systems”) of Ruili Group. As a result of this acquisition, the Company's product offerings were expanded to both commercial and passenger vehicles' brake systems and other key safety-related auto parts. The Company has two operating segments: Commercial Vehicle Brake Systems and Passenger Vehicle Brake Systems. For The Nine Months Ended September 30, 2016 2015 NET SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 154,366,728 $ 130,397,720 Passenger vehicles brake systems 34,884,224 31,398,956 Net sales $ 189,250,952 $ 161,796,676 INTERSEGMENT SALES Commercial vehicles brake systems $ $ Passenger vehicles brake systems Intersegment sales $ $ GROSS PROFIT Commercial vehicles brake systems $ 45,317,101 $ 36,176,934 Passenger vehicles brake systems 10,393,378 9,086,122 Gross profit $ 55,710,479 $ 45,263,056 Other operating income 694,717 229,801 Selling and distribution expenses (20,637,464) (15,250,216) General and administrative expenses (16,717,966) (15,784,330) Research and development expenses (6,533,540) (5,831,756) Income from operations 12,516,226 8,626,555 Interest income 1,047,667 683,561 Government grants 569,041 176,157 Other income 1,103,267 2,440,429 Interest expenses (515,547) (804,321) Other expenses (922,553) (807,407) Income before income tax expense $ 13,798,101 $ 10,314,974 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 9,994,389 $ 1,973,423 Passenger vehicles brake systems 2,272,202 467,088 Total $ 12,266,591 $ 2,440,511 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 4,375,484 $ 4,650,260 Passenger vehicles brake systems 981,882 1,114,878 Total $ 5,357,366 $ 5,765,138 September 30, 2016 December 31, 2015 TOTAL ASSETS Commercial vehicles brake systems $ 231,617,595 $ 261,924,719 Passenger vehicles brake systems 49,471,719 58,629,337 Total $ 281,089,314 $ 320,554,056 September 30, 2016 December 31, 2015 LONG LIVED ASSETS Commercial vehicles brake systems $ 50,794,994 $ 42,961,388 Passenger vehicles brake systems 10,849,416 9,616,495 Total $ 61,644,410 $ 52,577,883 |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
CONTINGENCIES [Abstract] | |
CONTINGENCIES | NOTE N CONTINGENCIES (1) As described in Note G, the Company purchased the Dongshan Facility from Ruili Group in 2007 and subsequently transferred the plants and land use right to Ruili Group. The Company has never obtained the land use right certificate nor the property ownership certificate of the building for the Dongshan Facility. The Company reserved the relevant tax amount of RMB 4,560,000 745,220 3 (2) The information of lease commitments is provided in Note K. (3) The information of guarantees and assets pledged is provided in Note D. |
BASIS OF PRESENTATION AND SIG21
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
ACCOUNTING METHOD | The Company uses the accrual method of accounting for financial statement and tax return purposes. |
USE OF ESTIMATES | The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | For certain of the Company’s financial instruments, including cash and cash equivalents, short term investments, trade receivables and payables, prepaid expenses, deposits and other current assets, short-term bank borrowings, and other payables and accruals, the carrying amounts approximate fair values due to their short maturities. 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. |
SHORT TERM INVESTMENTS | The Company’s short term investments include term deposits with an original maturity from three months to one year with financial institutions. Term deposit in the amount of $ 3,317,650 22,000,000 January 13, 2016 July 13, 2016 Term deposits in the amount of $ 21,667,802 140,000,000 March 24, 2015 March 24, 2016 Term deposit in the amount of $ 6,190,800 40,000,000 December 17, 2015 June 17, 2016 |
RESTRICTED CASH | Restricted cash mainly represents bank deposits used to pledge the bank acceptance notes. The Company entered into credit agreements with commercial banks in China (“endorsing banks”) which agree to provide credit within stipulated limits. Within the stipulated credit limits, the Company can issue bank acceptance notes to its suppliers as payments for the purchases. In order to issue bank acceptance notes, the Company is generally required to make initial deposits or pledge note receivables to the endorsing banks in amounts of certain percentage of the face amount of the bank acceptance notes to be issued by the Company. The cash in such accounts is restricted for use over the terms of the bank acceptance notes, which are normally three to six months. |
RELATED PARTY TRANSACTIONS | A related party is generally defined as (i) any person that holds 10 |
NOTES RECEIVABLE | Notes receivable generally due within one year are issued by some customers to pay certain outstanding receivable balances to the Company with specific payment terms and definitive due dates. Notes receivable do not bear interest. As of September 30, 2016 and December 31, 2015, notes receivables in the amount of $ 31,288,866 13,647,583 |
REVENUE RECOGNITION | Revenue from the sale of goods is recognized when the risks and rewards of ownership of the goods have transferred to the buyer. The transfer is decided by several factors, including factors such as when persuasive evidence of an arrangement exits, delivery has occurred, the sales price is fixed and determinable, and collection is probable. Revenue consists of the invoice value for the sale of goods and services net of value-added tax, rebates and discounts and returns. The Company nets sales return in gross revenue, i.e., the revenue shown in the income statement is the net sales. |
COST OF SALES | Cost of sales consists primarily of materials costs, applicable local government levies, freight charges, purchasing and receiving costs, inspection costs, employee compensation, depreciation and related costs, which are directly attributable to production. Write-down of inventories to lower of cost or market is also recorded in cost of sales, if any. |
FOREIGN CURRENCY TRANSLATION | The Company maintains its books and accounting records in RMB, the currency of the PRC. The Company’s functional currency is also RMB. The Company has adopted FASB ASC 830-30 in translating financial statement amounts from RMB to the Company’s reporting currency, United States dollars (“US$”). All assets and liabilities are translated at the current rate. The shareholders’ equity accounts are translated at the appropriate historical rate. Revenue and expenses are translated at the weighted average rates in effect on the transaction dates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. During the three and nine months ended September 30, 2016, the Company had $ 43,418 320,019 1,268,968 1,346,440 |
RECLASSIFICATIONS | Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
Schedule of Related Party Transactions | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 PURCHASES FROM: Guangzhou Kormee $ 138,580 $ 957,017 $ 826,474 $ 1,331,566 Ruian Kormee 450,665 202,924 807,769 680,983 Ruili Group Co., Ltd. 1,027,210 751,044 2,972,963 2,379,870 Shanghai Dachao 82,671 116,415 Total Purchases $ 1,699,126 $ 1,910,985 $ 4,723,621 $ 4,392,419 SALES TO: Guangzhou Kormee $ 1,529,583 $ 145,564 $ 3,174,040 $ 408,334 Ruian Kormee 2,327 573 30,077 Ruili Group Co., Ltd. 1,785,443 2,171,824 8,334,394 4,241,472 Total Sales $ 3,315,026 $ 2,319,715 $ 11,509,007 $ 4,679,883 September 30, December 31, 2016 2015 ACCOUNTS RECEIVABLE FROM RELATED PARTY Guangzhou Kormee $ 1,224,333 $ Total $ 1,224,333 $ ACCOUNTS PAYABLE TO RELATED PARTIES Ruian Kormee $ 1,024,909 $ 340,175 Guangzhou Kormee 75,968 Ruili Group Co., Ltd. 4,506,659 697,643 Shanghai Dachao 51,149 19,751 Total $ 5,582,717 $ 1,133,537 OTHER PAYBLES TO RELATED PARTY Ruili Group Co., Ltd. $ 177,603 $ Total $ 177,603 $ |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
ACCOUNTS RECEIVABLE [Abstract] | |
Schedule of Allowance for Doubtful Accounts | Accounts receivable, net consisted of the following: September 30, December 31, 2016 2015 Accounts receivable $ 102,320,042 $ 83,898,730 Less: allowance for doubtful accounts (17,828,900) (12,075,402) Accounts receivable, net $ 84,491,142 $ 71,823,328 No customer individually accounted for more than 10% of our revenues or accounts receivable for the nine months ended September 30, 2016. The changes in the allowance for doubtful accounts on September 30, 2016 and December 31, 2015 are summarized as follows: September 30, December 31, 2016 2015 Beginning balance $ 12,075,402 $ 6,475,587 Add: increase to allowance 5,753,498 5,599,815 Less: accounts written off Ending balance $ 17,828,900 $ 12,075,402 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
INVENTORIES [Abstract] | |
Schedule of Inventories | On September 30, 2016 and December 31, 2015, inventories consisted of the following: September 30, December 31, 2016 2015 Raw materials $ 11,860,248 $ 13,038,945 Work in process 24,940,909 28,786,709 Finished goods 27,077,997 31,836,206 Total inventories 63,879,154 $ 73,661,860 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
PROPERTY, PLANT AND EQUIPMENT [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment consisted of the following on September 30, 2016 and December 31, 2015: September 30, December 31, 2016 2015 Machinery $ 58,816,765 $ 50,680,639 Molds 1,306,664 1,343,730 Office equipment 2,089,076 2,077,411 Vehicles 2,159,443 1,983,028 Buildings 16,441,055 7,756,917 Machinery held under capital lease 26,728,626 29,012,601 Leasehold improvements 476,365 489,878 Sub-Total 108,017,994 93,344,204 Less: accumulated depreciation (55,930,374) (55,782,299) Property, plant and equipment, net $ 52,087,620 $ 37,561,905 |
DEFERRED TAX ASSETS AND DEFER26
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets consisted of the following as of September 30, 2016 and December 31, 2015: September 30, December 31, 2016 2015 Deferred tax assets - current Allowance for doubtful accounts $ 2,750,252 $ 1,860,379 Revenue (net of cost) 5,974 45,815 Unpaid accrued expenses 333,707 180,174 Warranty 951,591 875,751 Deferred tax assets 4,041,524 2,962,119 Valuation allowance Net deferred tax assets - current $ 4,041,524 $ 2,962,119 Deferred tax liabilities - current Revenue (net of cost) $ $ Others 52,390 Deferred tax liabilities - current 52,390 Net deferred tax assets - current $ 4,041,524 $ 2,909,729 |
SHORT-TERM BANK LOANS (Tables)
SHORT-TERM BANK LOANS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SHORT-TERM BANK LOANS [Abstract] | |
Schedule of Bank Loans | Bank loans represented the following as of September 30, 2016 and December 31, 2015: September 30, December 31, 2016 2015 Secured $ 25,133,254 $ 23,367,207 |
Schedule of Personal or Corporate Guarantees | Corporate or personal guarantees: $ 2,926,113 Pledged by Ruili Group, a related party, with its land and buildings, and guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal shareholders. $ 2,065,051 Pledged by Ruili Group, a related party, with its land and buildings, and guaranteed by Ruili Group, a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal shareholders. $ 11,481,326 Guaranteed by Ruili Group, a related party, Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company’s principal stockholders. $ 2,388,511 Pledged by Ruili Group, a related party, with its land and buildings. $ 6,272,252 Guaranteed by Ruili Group, a related party. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | Nine Months Ended Nine Months Ended September 30, 2016 September 30, 2015 US Statutory income tax rate 35.00 % 35.00 % Valuation allowance recognized with respect to the loss in the US company -35.00 % -35.00 % Hong Kong Statutory income tax rate 16.50 % 16.50 % Valuation allowance recognized with respect to the loss in the Hong Kong company -16.50 % -16.50 % China Statutory income tax rate 25.00 % 25.00 % Effects of income tax exemptions and reliefs -10.0 % - % Effects of additional deduction allowed for R&D expenses -3.54 % -7.07 % Other items 0.70 % 3.60 % Effective tax rate 12.16 % 21.53 % |
Schedule of Income Tax Provision | Nine Months Ended Nine Months Ended Current $ 2,942,048 $ 4,058,485 Deferred (1,264,061) (1,838,158) Total $ 1,677,987 $ 2,220,327 |
WARRANTY CLAIMS (Tables)
WARRANTY CLAIMS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
WARRANTY CLAIMS [Abstract] | |
Schedule of Accrued Warranty Expenses | The movement of accrued warranty expenses for the nine months ended September 30, 2016 was as follows: Beginning balance at January 1, 2016 $ 5,838,343 Aggregate increase for new warranties issued during current period 1,741,415 Aggregate reduction for payments made (1,235,817) Ending balance on September 30, 2016: $ 6,343,941 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SEGMENT INFORMATION [Abstract] | |
Schedule of Segment Information, by Segment | All of the Company’s long-lived assets are located in the PRC and Hong Kong. The Company and its subsidiaries do not have long-lived assets in the United States for the reporting periods. For The Nine Months Ended September 30, 2016 2015 NET SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 154,366,728 $ 130,397,720 Passenger vehicles brake systems 34,884,224 31,398,956 Net sales $ 189,250,952 $ 161,796,676 INTERSEGMENT SALES Commercial vehicles brake systems $ $ Passenger vehicles brake systems Intersegment sales $ $ GROSS PROFIT Commercial vehicles brake systems $ 45,317,101 $ 36,176,934 Passenger vehicles brake systems 10,393,378 9,086,122 Gross profit $ 55,710,479 $ 45,263,056 Other operating income 694,717 229,801 Selling and distribution expenses (20,637,464) (15,250,216) General and administrative expenses (16,717,966) (15,784,330) Research and development expenses (6,533,540) (5,831,756) Income from operations 12,516,226 8,626,555 Interest income 1,047,667 683,561 Government grants 569,041 176,157 Other income 1,103,267 2,440,429 Interest expenses (515,547) (804,321) Other expenses (922,553) (807,407) Income before income tax expense $ 13,798,101 $ 10,314,974 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 9,994,389 $ 1,973,423 Passenger vehicles brake systems 2,272,202 467,088 Total $ 12,266,591 $ 2,440,511 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 4,375,484 $ 4,650,260 Passenger vehicles brake systems 981,882 1,114,878 Total $ 5,357,366 $ 5,765,138 September 30, 2016 December 31, 2015 TOTAL ASSETS Commercial vehicles brake systems $ 231,617,595 $ 261,924,719 Passenger vehicles brake systems 49,471,719 58,629,337 Total $ 281,089,314 $ 320,554,056 September 30, 2016 December 31, 2015 LONG LIVED ASSETS Commercial vehicles brake systems $ 50,794,994 $ 42,961,388 Passenger vehicles brake systems 10,849,416 9,616,495 Total $ 61,644,410 $ 52,577,883 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Textual) | 1 Months Ended | 9 Months Ended | ||||||||
Jun. 29, 2016USD ($) | Jun. 29, 2016CNY (¥) | May 31, 2016USD ($) | May 31, 2016CNY (¥) | Sep. 30, 2016USD ($)m² | Sep. 30, 2016CNY (¥)m² | Sep. 30, 2015USD ($) | May 05, 2016m² | Nov. 11, 2009 | Jan. 17, 2004 | |
Description Of Business [Line Items] | ||||||||||
Payments to Acquire Property, Plant, and Equipment | $ | $ 12,266,591 | $ 2,440,511 | ||||||||
Ruian [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Ownership percentage | 90.00% | 90.00% | ||||||||
Development Zone Facility [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Capital Expenditures Incurred but Not yet Paid | $ 76,533,000 | ¥ 501,000,000 | ||||||||
Area of Land | 157,619 | |||||||||
Payments to Acquire Property, Plant, and Equipment | $ 3,016,000 | ¥ 20,000,000 | ||||||||
Land Subject to Ground Leases | 89,229 | 89,229 | ||||||||
Development Zone Facility [Member] | Asset Acquisition Agreement Ruili Group [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Payments to Acquire Property, Plant, and Equipment | $ 73,478,000 | ¥ 481,000,000 | ||||||||
Dongshan Facility [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Area of Land | 58,714 | |||||||||
Ruili Group, Co., Ltd. [Member] | Ruian [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Ownership percentage | 10.00% | |||||||||
SORL International Holding, Ltd. [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Ownership percentage | 60.00% | |||||||||
MGR Hong Kong Limited [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Ownership percentage | 30.00% | |||||||||
Taiwanese Investor [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Ownership percentage | 10.00% | 10.00% | 10.00% | |||||||
Fairford [Member] | Ruian [Member] | ||||||||||
Description Of Business [Line Items] | ||||||||||
Ownership percentage | 90.00% |
BASIS OF PRESENTATION AND SIG32
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Jul. 13, 2016USD ($) | Jun. 17, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Mar. 24, 2016USD ($) | Jul. 13, 2016CNY (¥) | Jun. 17, 2016CNY (¥) | Mar. 24, 2016CNY (¥) | Dec. 31, 2015USD ($) | Nov. 11, 2009 | |
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Foreign Currency Transaction Gain (Loss), before Tax | $ 43,418 | $ 1,268,968 | $ 320,019 | $ 1,346,440 | ||||||||
Notes Receivable [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Pledged assets amount | $ 31,288,866 | $ 31,288,866 | $ 13,647,583 | |||||||||
Ruili Group Co Ltd [Member] | Time Deposits [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Pledged assets amount | $ 3,317,650 | $ 21,667,802 | ¥ 22,000,000 | ¥ 140,000,000 | ||||||||
Maturity date, Start | Jan. 13, 2016 | Mar. 24, 2015 | ||||||||||
Maturity date, End | Jul. 13, 2016 | Mar. 24, 2016 | ||||||||||
Hangzhou Xiangwei Wuzi Co [Member] | Time Deposits [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Pledged assets amount | $ 6,190,800 | ¥ 40,000,000 | ||||||||||
Maturity date, Start | Dec. 17, 2015 | |||||||||||
Maturity date, End | Jun. 17, 2016 | |||||||||||
Taiwanese Investor [Member] | ||||||||||||
Summary of Significant Accounting Policy [Line Items] | ||||||||||||
Ownership percentage | 10.00% | 10.00% | 10.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | $ 1,699,126 | $ 1,910,985 | $ 4,723,621 | $ 4,392,419 |
SALES TO: | 3,315,026 | 2,319,715 | 11,509,007 | 4,679,883 |
Guangzhou Kormee [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 138,580 | |||
Ruian Kormee [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 450,665 | 202,924 | 807,769 | 680,983 |
SALES TO: | 0 | 2,327 | 573 | 30,077 |
Ruili Group, Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 1,027,210 | 751,044 | 2,972,963 | 2,379,870 |
SALES TO: | 1,785,443 | 2,171,824 | 8,334,394 | 4,241,472 |
Guangzhou Kormee Vehicle Brake Technology Development [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | 957,017 | 826,474 | 1,331,566 | |
SALES TO: | 1,529,583 | 145,564 | 3,174,040 | 408,334 |
Shanghai Dachao Electric Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM: | $ 82,671 | $ 0 | $ 116,415 | $ 0 |
RELATED PARTY TRANSACTIONS (D34
RELATED PARTY TRANSACTIONS (Details 1) | Sep. 30, 2016USD ($) | Sep. 30, 2016CNY (¥) | May 05, 2016USD ($) | May 05, 2016CNY (¥) | Dec. 31, 2015USD ($) |
Related Party Transaction [Line Items] | |||||
ACCOUNTS RECEIVABLE FROM RELATED PARTY | $ 1,224,333 | $ 0 | |||
ACCOUNTS PAYABLE TO RELATED PARTIES | 5,582,717 | 1,133,537 | |||
OTHER PAYABLES TO RELATED PARTIES | 177,603 | 0 | |||
Ruian Kormee [Member] | |||||
Related Party Transaction [Line Items] | |||||
ACCOUNTS RECEIVABLE FROM RELATED PARTY | 0 | 0 | |||
ACCOUNTS PAYABLE TO RELATED PARTIES | 1,024,909 | 340,175 | |||
Guangzhou Kormee [Member] | |||||
Related Party Transaction [Line Items] | |||||
ACCOUNTS RECEIVABLE FROM RELATED PARTY | 1,224,333 | 0 | |||
ACCOUNTS PAYABLE TO RELATED PARTIES | 0 | 75,968 | |||
Ruili Group Co Ltd [Member] | |||||
Related Party Transaction [Line Items] | |||||
ACCOUNTS PAYABLE TO RELATED PARTIES | 4,506,659 | ¥ 481,000,000 | $ 74,444,000 | ¥ 481,000,000 | 697,643 |
OTHER PAYABLES TO RELATED PARTIES | 177,603 | $ 3,016,000 | ¥ 20,000,000 | 0 | |
Shanghai Dachao Electric Technology Co., Ltd. [Member] | |||||
Related Party Transaction [Line Items] | |||||
ACCOUNTS PAYABLE TO RELATED PARTIES | $ 51,149 | $ 19,751 |
RELATED PARTY TRANSACTIONS (D35
RELATED PARTY TRANSACTIONS (Details Textual) | 9 Months Ended | ||||
Sep. 30, 2016USD ($) | Sep. 30, 2016CNY (¥) | May 05, 2016USD ($)m² | May 05, 2016CNY (¥)m² | Dec. 31, 2015USD ($) | |
Related Party Transaction [Line Items] | |||||
Due to Affiliate, Current | $ 177,603 | $ 0 | |||
Accounts Payable, Related Parties, Current | 5,582,717 | 1,133,537 | |||
Ruili Group Co Ltd [Member] | |||||
Related Party Transaction [Line Items] | |||||
Guarantee amount | $ 77,540,000 | ¥ 501,000,000 | |||
Due from Related Parties, Current | 18,247,384 | ||||
Due to Affiliate, Current | 177,603 | 3,016,000 | 20,000,000 | 0 | |
Accounts Payable, Related Parties, Current | $ 4,506,659 | ¥ 481,000,000 | $ 74,444,000 | ¥ 481,000,000 | $ 697,643 |
Ruili Group Co Ltd [Member] | Shanghai Dachao [Member] | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 49.00% | 49.00% | |||
Ruili Group Co Ltd [Member] | 6-month Fixed Term Deposit 1 [Member] | |||||
Related Party Transaction [Line Items] | |||||
Pledged assets amount | $ 3,317,650 | ¥ 22,000,000 | |||
Pledged Assets, Maturity Date | Jul. 13, 2016 | ||||
Ruili Group Co Ltd [Member] | Credit Line by Bank of Ningbo [Member] | |||||
Related Party Transaction [Line Items] | |||||
Guarantee amount | $ 25,871,627 | 168,000,000 | |||
Guarantee start date | Mar. 24, 2015 | ||||
Guarantee end date | Mar. 24, 2016 | ||||
Ruili Group Co Ltd [Member] | Credit Line by China Everbright Bank [Member] | |||||
Related Party Transaction [Line Items] | |||||
Guarantee amount | $ 9,239,867 | 60,000,000 | |||
Guarantee start date | Feb. 26, 2015 | ||||
Ruili Group Co Ltd [Member] | Credit Line by China Guangfa Bank [Member] | |||||
Related Party Transaction [Line Items] | |||||
Guarantee amount | $ 8,315,880 | 54,000,000 | |||
Guarantee start date | Sep. 22, 2015 | ||||
Ruili Group Co Ltd [Member] | Credit Line by China Merchants Bank [Member] | |||||
Related Party Transaction [Line Items] | |||||
Guarantee amount | $ 7,699,889 | 50,000,000 | |||
Guarantee start date | Jul. 29, 2015 | ||||
Ruili Group Co Ltd [Member] | Credit Line by Bank of Ningbo [Member] | |||||
Related Party Transaction [Line Items] | |||||
Guarantee amount | $ 17,182,404 | 108,000,000 | |||
Guarantee start date | Aug. 22, 2014 | ||||
Guarantee end date | Aug. 21, 2015 | ||||
Hangzhou Xiangwei Wuzi Co [Member] | 6-month Fixed Term Deposit 3 [Member] | |||||
Related Party Transaction [Line Items] | |||||
Pledged assets amount | $ 6,159,911 | ¥ 40,000,000 | |||
Pledged Assets, Maturity Date | Jun. 17, 2016 | ||||
Maturity date, Start | Dec. 17, 2015 | ||||
Brake Systems Business [Member] | |||||
Related Party Transaction [Line Items] | |||||
Area of Land | m² | 89,229 | 89,229 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Concentration Risk [Line Items] | ||
Accounts receivable | $ 102,320,042 | $ 83,898,730 |
Less: allowance for doubtful accounts | (17,828,900) | (12,075,402) |
Accounts receivable, net | $ 84,491,142 | $ 71,823,328 |
ACCOUNTS RECEIVABLE (Details 1)
ACCOUNTS RECEIVABLE (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Concentration Risk [Line Items] | ||
Beginning balance | $ 12,075,402 | $ 6,475,587 |
Add: increase to allowance | 5,753,498 | 5,599,815 |
Less: accounts written off | 0 | 0 |
Ending balance | $ 17,828,900 | $ 12,075,402 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Raw materials | $ 11,860,248 | $ 13,038,945 |
Work in process | 24,940,909 | 28,786,709 |
Finished goods | 27,077,997 | 31,836,206 |
Total inventories | $ 63,879,154 | $ 73,661,860 |
PROPERTY, PLANT AND EQUIPMENT39
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Sub-Total | $ 108,017,994 | $ 93,344,204 |
Less: accumulated depreciation | (55,930,374) | (55,782,299) |
Property, plant and equipment, net | 52,087,620 | 37,561,905 |
Machinery [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 58,816,765 | 50,680,639 |
Molds [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 1,306,664 | 1,343,730 |
Office equipments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 2,089,076 | 2,077,411 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 2,159,443 | 1,983,028 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 16,441,055 | 7,756,917 |
Machinery held under capital lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 26,728,626 | 29,012,601 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | $ 476,365 | $ 489,878 |
PROPERTY, PLANT AND EQUIPMENT40
PROPERTY, PLANT AND EQUIPMENT (Details Textual) | 1 Months Ended | 9 Months Ended | ||||||||
May 05, 2016USD ($) | May 05, 2016CNY (¥) | Sep. 28, 2007USD ($) | Sep. 28, 2007CNY (¥) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016CNY (¥) | May 05, 2016CNY (¥) | Dec. 31, 2015USD ($) | Sep. 28, 2007CNY (¥) | |
Property, Plant and Equipment [Line Items] | ||||||||||
Depreciation | $ 5,110,014 | $ 5,421,040 | ||||||||
Payments to Acquire Land Held-for-use | $ 20,000,000 | ¥ 152,000,000 | ||||||||
Land Held For Use Total Asset Appraised Value | 20,400,000 | ¥ 154,000,000 | ||||||||
Noncash or Part Noncash Acquisition, Fixed Assets Acquired | $ 9,100,000 | ¥ 69,400,000 | ||||||||
Tax Rate Land Use Rights | 3.00% | 3.00% | ||||||||
Accounts Payable, Related Parties, Current | $ 5,582,717 | $ 1,133,537 | ||||||||
Ruili Group [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Accounts Payable, Related Parties, Current | $ 74,444,000 | 4,506,659 | ¥ 481,000,000 | ¥ 481,000,000 | $ 697,643 | |||||
Dongshan Facility [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Capital Expenditures Incurred but Not yet Paid | 76,500,000 | ¥ 501,000,000 | ||||||||
Real Estate Facility Appraised Value | 19,100,000 | 125,000,000 | ||||||||
Tax Amount Reserved for Land Use Rights | 745,220 | 4,560,000 | ||||||||
Development Zone Facility [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Real Estate Facility Appraised Value | 95,600,000 | 626,000,000 | ||||||||
Tax Amount Reserved for Land Use Rights | $ 2,300,000 | ¥ 15,030,000 | ||||||||
Tax Rate Land Use Rights | 3.00% | 3.00% | ||||||||
Land Use Right Facility [Member] | Ruili Group [Member] | ||||||||||
Property, Plant and Equipment [Line Items] | ||||||||||
Accounts Payable, Related Parties, Current | $ 3,000,000 | ¥ 20,000,000 |
DEFERRED TAX ASSETS AND DEFER41
DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Deferred tax assets - current | ||
Allowance for doubtful accounts | $ 2,750,252 | $ 1,860,379 |
Revenue (net of cost) | 5,974 | 45,815 |
Unpaid accrued expenses | 333,707 | 180,174 |
Warranty | 951,591 | 875,751 |
Deferred tax assets | 4,041,524 | 2,962,119 |
Valuation allowance | 0 | 0 |
Net deferred tax assets - current | 4,041,524 | 2,962,119 |
Deferred tax liabilities - current | ||
Revenue (net of cost) | 0 | 0 |
Others | 0 | 52,390 |
Deferred tax liabilities - current | 0 | 52,390 |
Net deferred tax assets - current | $ 4,041,524 | $ 2,909,729 |
SHORT-TERM BANK LOANS (Details)
SHORT-TERM BANK LOANS (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
SHORT-TERM BANK LOANS [Abstract] | ||
Secured | $ 25,133,254 | $ 23,367,207 |
SHORT-TERM BANK LOANS (Details
SHORT-TERM BANK LOANS (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Maximum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 4.57% | 4.57% | |||
Minimum [Member] | |||||
Short-term Debt [Line Items] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 0.55% | 0.55% | |||
Ruili Group Co Ltd And Related Parties And Shareholders One [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | $ 2,926,113 | $ 2,926,113 | |||
Ruili Group Co Ltd And Related Parties And Shareholders Two [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 2,065,051 | 2,065,051 | |||
Ruili Group Co Ltd And Related Parties And Shareholders Three [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 11,481,326 | 11,481,326 | |||
Ruili Group, Co., Ltd. [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 2,388,511 | 2,388,511 | |||
Ruili Group Co Ltd And Related Party [Member] | |||||
Short-term Debt [Line Items] | |||||
Corporate or personal guarantees | 6,272,252 | $ 6,272,252 | |||
Short Term Bank Loans [Member] | |||||
Short-term Debt [Line Items] | |||||
Maturity date, Start | Nov. 1, 2016 | ||||
Maturity date, End | Sep. 21, 2017 | ||||
Interest expenses | 214,974 | $ 213,797 | $ 515,547 | $ 373,518 | |
Accounts receivable pledged as collateral | $ 6,609,505 | $ 6,609,505 | $ 15,836,158 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax [Line Items] | ||
China Statutory income tax rate | 25.00% | 25.00% |
Effects of income tax exemptions and reliefs | (10.00%) | 0.00% |
Effects of additional deduction allowed for R&D expenses | (3.54%) | (7.07%) |
Other items | 0.70% | 3.60% |
Effective tax rate | 12.16% | 21.53% |
HONG KONG | ||
Income Tax [Line Items] | ||
Foreign Statutory income tax rate | 16.50% | 16.50% |
Valuation allowance recognized with respect to the loss in the US company | (16.50%) | (16.50%) |
UNITED STATES | ||
Income Tax [Line Items] | ||
Foreign Statutory income tax rate | 35.00% | 35.00% |
Valuation allowance recognized with respect to the loss in the US company | (35.00%) | (35.00%) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
INCOME TAXES [Abstract] | ||||
Current | $ 2,942,048 | $ 4,058,485 | ||
Deferred | (1,253,285) | (1,838,158) | ||
Total | $ 435,534 | $ 427,905 | $ 1,677,987 | $ 2,220,327 |
OPERATING LEASES WITH RELATED46
OPERATING LEASES WITH RELATED PARTIES (Details Textual) | 9 Months Ended | ||
Sep. 30, 2016USD ($)m² | Sep. 30, 2016CNY (¥)m² | Sep. 30, 2015USD ($) | |
Operating Leased Assets [Line Items] | |||
Lease expenses | $ | $ 1,402,658 | $ 1,245,477 | |
Apartment Buildings [Member] | |||
Operating Leased Assets [Line Items] | |||
Number of apartments | 2 | 2 | |
Apartment Buildings [Member] | Ruili Group [Member] | |||
Operating Leased Assets [Line Items] | |||
Annual lease expense | $ 333,688 | ¥ 2,100,000 | |
Manufacturing Plant [Member] | Ruili Group [Member] | |||
Operating Leased Assets [Line Items] | |||
Area of manufacturing plant | m² | 89,229 | 89,229 | |
Annual lease expense | $ 1,293,070 | ¥ 8,137,680 |
WARRANTY CLAIMS (Details)
WARRANTY CLAIMS (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Beginning balance at January 1, 2016 | $ 5,838,343 | |
Aggregate increase for new warranties issued during current period | 1,741,415 | $ 1,515,278 |
Aggregate reduction for payments made | (1,235,817) | |
Ending balance on September 30, 2016: | $ 6,343,941 |
WARRANTY CLAIMS (Details Textua
WARRANTY CLAIMS (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Product Warranty Accrual, Warranties Issued | $ 1,741,415 | $ 1,515,278 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||
Sales | $ 61,878,492 | $ 50,323,832 | $ 189,250,952 | $ 161,796,676 | |
Gross profit | 18,637,712 | 14,095,049 | 55,710,479 | 45,263,056 | |
Other operating income | 334,845 | 69,480 | 694,717 | 229,801 | |
Selling and distribution expenses | 7,949,947 | 4,813,129 | 20,637,464 | 15,250,216 | |
General and administrative expenses | 4,878,979 | 5,634,735 | 16,717,966 | 15,784,330 | |
Research and development expenses | 2,409,891 | 2,261,665 | 6,533,540 | 5,831,756 | |
Income from operations | 3,733,740 | 1,455,000 | 12,516,226 | 8,626,555 | |
Interest income | 33,979 | 162,770 | 1,047,667 | 683,561 | |
Government grants | 424,029 | 150,177 | 569,041 | 176,157 | |
Other income | 212,513 | 1,675,000 | 763,534 | 2,517,901 | |
Interest expenses | (214,974) | (395,121) | (515,547) | (804,321) | |
Other expenses | (155,261) | (198,828) | (582,820) | (884,879) | |
Income before income tax expense | 4,034,026 | $ 2,848,998 | 13,798,101 | 10,314,974 | |
CAPITAL EXPENDITURE | 12,266,591 | 2,440,511 | |||
DEPRECIATION AND AMORTIZATION | 5,357,366 | 5,765,138 | |||
TOTAL ASSETS | 281,089,314 | 281,089,314 | $ 320,554,056 | ||
LONG LIVED ASSETS | 61,644,410 | 61,644,410 | 52,577,883 | ||
INTERSEGMENT SALES [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | 0 | 0 | |||
Commercial Vehicles Brake Systems [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | 154,366,728 | 130,397,720 | |||
CAPITAL EXPENDITURE | 9,994,389 | 1,973,423 | |||
DEPRECIATION AND AMORTIZATION | 4,375,484 | 4,650,260 | |||
TOTAL ASSETS | 231,617,595 | 231,617,595 | 261,924,719 | ||
LONG LIVED ASSETS | 50,794,994 | 50,794,994 | 42,961,388 | ||
Commercial Vehicles Brake Systems [Member] | INTERSEGMENT SALES [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | 0 | 0 | |||
Gross profit | 45,317,101 | 36,176,934 | |||
Passenger Vehicles Brake Systems [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | 34,884,224 | 31,398,956 | |||
Selling and distribution expenses | (20,637,464) | (15,250,216) | |||
CAPITAL EXPENDITURE | 2,272,202 | 467,088 | |||
DEPRECIATION AND AMORTIZATION | 981,882 | 1,114,878 | |||
TOTAL ASSETS | 49,471,719 | 49,471,719 | 58,629,337 | ||
LONG LIVED ASSETS | $ 10,849,416 | 10,849,416 | $ 9,616,495 | ||
Passenger Vehicles Brake Systems [Member] | INTERSEGMENT SALES [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Sales | 0 | 0 | |||
Gross profit | $ 10,393,378 | $ 9,086,122 |
CONTINGENCIES (Details Textual)
CONTINGENCIES (Details Textual) | Sep. 30, 2016USD ($) | Sep. 30, 2016CNY (¥) |
Contingencies [Line Items] | ||
Tax rate, land use right | 3.00% | 3.00% |
Dongshan Facility [Member] | ||
Contingencies [Line Items] | ||
Relevant tax amount reserved | $ 745,220 | ¥ 4,560,000 |