Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 14, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SORL Auto Parts Inc | |
Entity Central Index Key | 0000714284 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
EntityFileNumber | 000-11991 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 19,304,921 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 10,294,982 | $ 73,588,229 |
Accounts receivable, net, including $333,881 and $261,889 from related parties as of June 30, 2019 and December 31, 2018, respectively | 184,101,294 | 150,047,797 |
Bank acceptance notes from customers | 73,736,320 | 62,052,225 |
Inventories, net | 183,519,272 | 204,285,427 |
Prepayments, current, including $4,421,841 and $3,670,573 to related party at June 30, 2019 and December 31, 2018, respectively | 16,228,104 | 7,776,591 |
Restricted cash, current | 14,572,162 | 19,307,003 |
Advances to related parties | 76,586,592 | 79,739,417 |
Deposits on loan agreements, current | 5,091,131 | |
Other current assets, net | 11,432,369 | 15,697,448 |
Total Current Assets | 575,562,226 | 612,494,137 |
Property, plant and equipment, net | 112,336,122 | 96,053,386 |
Land use rights, net | 20,745,600 | 21,124,455 |
Intangible assets, net | 39,291 | 220,232 |
Deposits on loan agreements, non-current | 5,091,131 | 10,199,324 |
Prepayments, non-current | 35,977,118 | 31,575,238 |
Other assets, non-current | 1,633,292 | 563,542 |
Restricted cash, non-current | 17,164,385 | 18,067,374 |
Deferred tax assets | 4,523,866 | 4,073,838 |
Total Non-current Assets | 197,510,805 | 181,877,389 |
Total Assets | 773,073,031 | 794,371,526 |
Current Liabilities | ||
Accounts payable and bank acceptance notes to vendors, including $18,956,493 and $23,805,200 due to related parties at June 30, 2019 and December 31, 2018, respectively | 193,279,964 | 236,433,718 |
Deposits received from customers | 60,023,972 | 51,529,795 |
Short term bank loans | 224,366,412 | 217,940,471 |
Current portion of long term loans, net of unamortized debt issuance costs | 21,976,961 | 21,141,029 |
Income tax payable, current | 4,481,767 | 3,421,486 |
Accrued expenses | 22,858,419 | 24,045,902 |
Due to related party | 7,774,184 | 5,959,752 |
Deferred income | 1,088,856 | 1,453,282 |
Other current liabilities | 4,040,963 | 3,288,344 |
Total Current Liabilities | 539,891,498 | 565,213,779 |
Long term loans, less current portion and net of unamortized debt issuance costs | 2,895,552 | 14,429,404 |
Operating lease liabilities, non-current | 714,307 | |
Income tax payable, non-current | 8,377,468 | 9,259,307 |
Total Non-current Liabilities | 11,987,327 | 23,688,711 |
Total Liabilities | 551,878,825 | 588,902,490 |
Equity | ||
Preferred stock - no par value; 1,000,000 authorized; none issued and outstanding as of June 30, 2019 and December 31, 2018 | ||
Common stock - $0.002 par value; 50,000,000 authorized, 19,304,921 issued and outstanding as of June 30, 2019 and December 31, 2018 | 38,609 | 38,609 |
Additional paid-in capital | (28,582,654) | (28,582,654) |
Reserves | 21,480,613 | 20,007,007 |
Accumulated other comprehensive income | 6,187,063 | 6,655,803 |
Retained earnings | 191,670,424 | 178,535,378 |
Total SORL Auto Parts, Inc. Stockholders' Equity | 190,794,055 | 176,654,143 |
Noncontrolling Interest In Subsidiaries | 30,400,151 | 28,814,893 |
Total Equity | 221,194,206 | 205,469,036 |
Total Liabilities and Equity | $ 773,073,031 | $ 794,371,526 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net, related parties | $ 333,881 | $ 261,889 |
Prepayments, related party | 4,421,841 | 3,670,573 |
Accounts payable and bank acceptance notes to vendors, related parties | $ 18,956,493 | $ 23,805,200 |
Preferred stock, par value per share | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
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 (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Sales | $ 139,373,482 | $ 128,504,952 | $ 275,593,406 | $ 236,231,634 |
Include: sales to related parties | 7,971,932 | 5,962,527 | 18,618,678 | 13,663,581 |
Cost of sales | 103,104,120 | 94,074,682 | 202,803,474 | 171,601,878 |
Gross profit | 36,269,362 | 34,430,270 | 72,789,932 | 64,629,756 |
Expenses: | ||||
Selling and distribution expenses | 16,463,830 | 13,956,009 | 29,348,397 | 23,993,870 |
General and administrative expenses | 9,221,426 | 7,694,411 | 16,596,319 | 12,468,189 |
Research and development expenses | 6,981,251 | 5,331,956 | 11,932,787 | 8,922,358 |
Total operating expenses | 32,666,507 | 26,982,376 | 57,877,503 | 45,384,417 |
Other operating income, net | 2,495,568 | 2,379,227 | 4,958,170 | 4,576,551 |
Income from operations | 6,098,423 | 9,827,121 | 19,870,599 | 23,821,890 |
Interest income | 1,479,841 | 811,580 | 3,216,616 | 2,299,844 |
Government grants | 1,707,433 | 609,592 | 3,499,845 | 743,525 |
Other income | 40,349 | 175,627 | 95,029 | 202,693 |
Interest expenses | (3,173,047) | (3,529,416) | (7,145,545) | (6,883,127) |
Exchange differences | 537,875 | 1,091,208 | (523,130) | 489,922 |
Other expenses | (90,772) | (254,271) | (568,691) | (1,145,085) |
Income before income taxes provision | 6,600,102 | 8,731,441 | 18,444,723 | 19,529,662 |
Provision for income taxes | 329,964 | 1,238,752 | 2,198,731 | 2,844,193 |
Net income | 6,270,138 | 7,492,689 | 16,245,992 | 16,685,469 |
Net income attributable to noncontrolling interest in subsidiaries | 632,013 | 749,269 | 1,637,340 | 1,668,547 |
Net income attributable to common stockholders | 5,638,125 | 6,743,420 | 14,608,652 | 15,016,922 |
Comprehensive income: | ||||
Net income | 6,270,138 | 7,492,689 | 16,245,992 | 16,685,469 |
Foreign currency translation adjustments | (4,810,043) | (11,013,074) | (520,822) | (2,968,540) |
Comprehensive income (loss) | 1,460,095 | (3,520,385) | 15,725,170 | 13,716,929 |
Comprehensive income (loss) attributable to noncontrolling interest in subsidiaries | 151,009 | (352,038) | 1,585,258 | 1,371,693 |
Comprehensive income (loss) attributable to common stockholders | $ 1,309,086 | $ (3,168,347) | $ 14,139,912 | $ 12,345,236 |
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 | $ 0.29 | $ 0.35 | $ 0.76 | $ 0.78 |
EPS - diluted | $ 0.29 | $ 0.35 | $ 0.76 | $ 0.78 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows From Operating Activities | ||
Net income | $ 16,245,992 | $ 16,685,469 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Allowance for doubtful accounts | 1,633,832 | 1,445,353 |
Depreciation and amortization | 6,927,367 | 5,832,558 |
Deferred income tax | (461,097) | 642,345 |
Gain on disposal of property and equipment | (38,330) | (73,809) |
Amortization of debt issuance costs | 325,413 | 697,633 |
Changes in assets and liabilities: | ||
Accounts receivable | (36,315,794) | (52,930,675) |
Bank acceptance notes from customers | (11,918,635) | 36,822,604 |
Inventories, net | 20,653,641 | (24,642,342) |
Prepayments | (8,856,410) | (25,749,865) |
Other currents assets, net | 2,048,887 | (5,158,214) |
Accounts payable and bank acceptance notes to vendors | (43,192,905) | 99,655,568 |
Deposits received from customers | 8,669,926 | 20,470,159 |
Income tax payable | 189,523 | (1,918,494) |
Deferred income | (365,935) | (259,132) |
Other current liabilities and accrued expenses | (757,093) | (5,426,422) |
Net Cash Flows Provided By (Used in) Operating Activities | (45,211,618) | 66,092,736 |
Cash Flows From Investing Activities | ||
Acquisition of property, equipment, plant and land use rights | (27,478,369) | (33,712,960) |
Advances to related parties | (15,305,460) | (190,438,634) |
Repayment of advances to related parties | 20,849,370 | 222,337,244 |
Proceeds from disposal of property and equipment | 528 | |
Net Cash Flows Used In Investing Activities | (21,933,931) | (1,814,350) |
Cash Flows From Financing Activities | ||
Proceeds from short term bank loans | 213,297,377 | 296,959,191 |
Repayment of short term bank loans | (206,444,518) | (256,944,835) |
Proceeds from related parties | 1,843,951 | 311,026,410 |
Repayments to related parties | (328,443,191) | |
Repayment of long term loans | (11,078,979) | (12,800,786) |
Net Cash Flows Provided By (Used In) Financing Activities | (2,382,169) | 9,796,789 |
Effects on changes in foreign exchange rate | 596,641 | (2,289,500) |
Net change in cash, cash equivalents and restricted cash | (68,931,077) | 71,785,675 |
Cash, cash equivalents, and restricted cash - beginning of the year | 110,962,606 | 4,598,176 |
Cash, cash equivalents, and restricted cash - end of the year | 42,031,529 | 76,383,851 |
Supplemental Cash Flow Disclosures: | ||
Interest paid | 5,697,269 | 5,521,273 |
Income taxes paid | 2,464,974 | 4,120,342 |
Non-cash Investing and Financing Transactions | ||
Loans from related party in the form of bank acceptance notes | 33,721,267 | |
Repayments to related party in the form of bank acceptance notes | 5,846,083 | |
Repayments from related party in the form of bank acceptance notes | 19,612,146 | |
Liabilities assumed in connection with acquisition of property, plant and equipment | $ 338,025 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | ||
Cash and cash equivalents | $ 10,294,982 | $ 24,525,413 |
Restricted cash, current | 14,572,162 | 51,858,438 |
Restricted cash, non-current | 17,164,385 | |
Total cash, cash equivalents, and restricted cash | $ 42,031,529 | $ 76,383,851 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Reserves | Retained Earnings | Accumulated Other Comprehensive Income | Total SORL Auto Parts, Inc. Stockholders’ Equity | Noncontrolling Interest | Total |
Balance at Dec. 31, 2017 | $ 38,609 | $ (28,582,654) | $ 17,562,357 | $ 168,244,329 | $ 15,903,188 | $ 173,165,829 | $ 27,126,102 | $ 200,291,931 |
Balance, shares at Dec. 31, 2017 | 19,304,921 | |||||||
Net income | 8,273,502 | 8,273,502 | 919,278 | 9,192,780 | ||||
Foreign currency translation adjustment | 7,240,081 | 7,240,081 | 804,453 | 8,044,534 | ||||
Transfer to reserve | 827,350 | (827,350) | ||||||
Balance at Mar. 31, 2018 | $ 38,609 | (28,582,654) | 18,389,707 | 175,690,481 | 23,143,269 | 188,679,412 | 28,849,833 | 217,529,245 |
Balance, shares at Mar. 31, 2018 | 19,304,921 | |||||||
Net income | 6,743,420 | 6,743,420 | 749,269 | 7,492,689 | ||||
Foreign currency translation adjustment | (9,911,767) | (9,911,767) | (1,101,307) | (11,013,074) | ||||
Transfer to reserve | 674,342 | (674,342) | ||||||
Balance at Jun. 30, 2018 | $ 38,609 | (28,582,654) | 19,064,049 | 181,759,559 | 13,231,502 | 185,511,065 | 28,497,795 | 214,008,860 |
Balance, shares at Jun. 30, 2018 | 19,304,921 | |||||||
Balance at Dec. 31, 2018 | $ 38,609 | (28,582,654) | 20,007,007 | 178,535,378 | 6,655,803 | 176,654,143 | 28,814,893 | 205,469,036 |
Balance, shares at Dec. 31, 2018 | 19,304,921 | |||||||
Net income | 8,970,527 | 8,970,527 | 1,005,327 | 9,975,854 | ||||
Foreign currency translation adjustment | 3,860,299 | 3,860,299 | 428,922 | 4,289,221 | ||||
Transfer to reserve | 904,794 | (904,794) | ||||||
Balance at Mar. 31, 2019 | $ 38,609 | (28,582,654) | 20,911,801 | 186,601,111 | 10,516,102 | 189,484,969 | 30,249,142 | 219,734,111 |
Balance, shares at Mar. 31, 2019 | 19,304,921 | |||||||
Net income | 5,638,125 | 5,638,125 | 632,013 | 6,270,138 | ||||
Foreign currency translation adjustment | (4,329,039) | (4,329,039) | (481,004) | (4,810,043) | ||||
Transfer to reserve | 568,812 | (568,812) | ||||||
Balance at Jun. 30, 2019 | $ 38,609 | $ (28,582,654) | $ 21,480,613 | $ 191,670,424 | $ 6,187,063 | $ 190,794,055 | $ 30,400,151 | $ 221,194,206 |
Balance, shares at Jun. 30, 2019 | 19,304,921 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE A - 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% ownership of Ruili Group Ruian Auto Parts Co., Ltd. (the "Joint Venture" or "Ruian"). The Company distributes products both in China and internationally under SORL trademarks. The Company's product range includes 140 categories and over 2,000 different specifications. 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% and 10%, respectively, of the paid-in capital of the Joint Venture. 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 individual investor. The joint venture was named SORL International Holding, Ltd. ("SIH") based in Hong Kong. SORL held a 60% interest in the joint venture, MGR held a 30% interest, and the Taiwanese individual investor held a 10% interest. SIH was primarily devoted to expanding SORL's international sales network in Asia-Pacific and creating a larger footprint in Europe and Africa with a target to create a truly global distribution network. In December 2015, due to poor financial performance of SIH, Fairfold sold all of its interest in SIH to the Taiwanese investor. After this transaction, SIH ceased to be a distributor of SORL in the international market. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND 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, 2018 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, 2018. 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, 2018, 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 a. ACCOUNTING METHOD The Company uses the accrual method of accounting for financial statement and tax return purposes. b. 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 periods. 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. c. FAIR VALUE OF FINANCIAL INSTRUMENTS For certain of the Company's financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, bank acceptance notes from customers, inventories, current prepayments, current portion of deposits on loan agreements, other current assets, accounts payable and bank acceptance notes to vendors, short term bank loans, deposit received from customers, current portion of long term loans, deferred income, income tax payable, accrued expenses and other current liabilities, 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. d. RESTRICTED CASH Restricted cash, current consists of bank deposits used to pledge bank acceptance notes, and deposits for obtaining letters of credit from a local bank. Restricted cash, non-current consists of deposits guaranteed for construction projects and the non-current portion of certain bank deposits used to pledge for bank acceptance notes. e. RELATED PARTY 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. f. BANK ACCEPTANCE NOTES RECEIVABLE FROM CUSTOMERS Bank acceptance notes from customers, generally due within six months and with specific payment terms and definitive due dates, are comprised of the notes issued by some customers to pay certain outstanding receivable balances to the Company, and the notes issued by the customers of related parties and transferred to the Company as loans from related parties or repayments from related parties. Bank acceptance notes do not bear interest. As of June 30, 2019 and December 31, 2018, bank acceptance notes receivable in the amount of $68,238,401 and $58,458,890, respectively, were pledged to banks to issue either short term bank loans or bank acceptance notes to vendors. The banks charge discount fees if the Company chooses to discount the bank acceptance notes for cash before the maturity of the notes and such discount fees are included in interest expenses in the accompanying unaudited consolidated statements of income and comprehensive income (loss). g. FOREIGN CURRENCY TRANSLATION The Company maintains its books and accounting records in RMB, the currency of the PRC. The Company's functional currency is also RMB. The Company has adopted FASB ASC 830-30 in translating financial statement amounts from RMB to the Company's reporting currency, United States dollars ("US$"). All assets and liabilities are translated at the current rate. The stockholders' 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. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE C - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (as amended by ASU 2018-01, 2018-10, 2018-11, 2018-20, and 2019-01, collectively ASC Topic 842), using the modified retrospective method. 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. As a result of electing this transition method, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC 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 sheet for new or existing lease arrangements with terms of 12 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 primary impact of applying ASC Topic 842 is the initial recognition of $1.6 million of lease liabilities and corresponding right-of-use assets on the Company's consolidated balance sheet as of January 1, 2019, for leases classified as operating leases under ASC Topic 840, as well as enhanced disclosure of the Company's leasing arrangements. There is no cumulative effect to retained earnings or other components of equity recognized as of January 1, 2019 and the adoption of this standard did not impact the consolidated statement of income and comprehensive income or consolidated statement of cash flows of the Company. The Company does not have finance lease arrangements as of June 30, 2019. See Note N for further discussion. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE D - RELATED PARTY TRANSACTIONS Related parties with whom the Company conducted business consist of the following: Name of Related Party Nature of Relationship Xiao Ping Zhang Principal shareholder, Chairman of the Board and Chief Executive Officer Shu Ping Chi Shareholder, member of the Board, wife of Xiao Ping Zhang Xiao Feng Zhang Shareholder, member of the Board, brother of Xiao Ping Zhang Ruili Group Co., Ltd. ("Ruili Group") 10% shareholder of Joint Venture and is collectively controlled by Xiao Ping Zhang, Shu Ping Chi, and Xiao Feng Zhang Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. ("Guangzhou Kormee") Controlled by Ruili Group Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. ("Ruian Kormee" and formerly known as "Ruian Kormee Automobile Braking Co., Ltd.") Wholly controlled by Guangzhou Kormee Changchun Kormee Auto Electric Co., Ltd. ("Changchun Kormee") Wholly controlled by Guangzhou Kormee Shanghai Dachao Electric Technology Co., Ltd. ("Shanghai Dachao") Ruili Group holds 66% of the equity interests in Shanghai Dachao Ruili MeiLian Air Management Systems (LangFang) Co., Ltd. ("Ruili Meilian") Controlled by Ruili Group Wenzhou Lichuang Automobile Parts Co., Ltd. ("Wenzhou Lichuang") Controlled by Ruili Group Ningbo Ruili Equipment Co., Ltd. ("Ningbo Ruili") Controlled by Ruili Group Shanghai Ruili Real Estate Development Co., Ltd. ("Shanghai Ruili") Wholly owned by Ruili Group Kunshan Yuetu Real Estate Development Co., Ltd. ("Kunshan Yuetu") Collectively owned by Ruili Group and Shu Ping Chi Shanghai Tabouk Auto Components Co., Ltd. ("Shanghai Tabouk") Collectively owned by Xiao Feng Zhang and Xiao Ping Zhang Hangzhou Ruili Property Development Co., Ltd. Collectively owned by Ruili Group and Xiao Ping Zhang Hangzhou Hangcheng Friction Material Co., Ltd. ("Hangzhou Hangcheng") Controlled by Ruili Group Hangzhou Ruili Binkang Real Estate Development Co. Ltd. Controlled by Hangzhou Ruili Property Development Co., Ltd. SHNS Precision Die Casting (Yangzhou) Co. Ltd. ("SHNS Precision") Controlled by Ruili Group The Company continues to purchase primarily packaging materials from Ruili Group. In addition, the Company purchases automotive components from other related parties, including Guangzhou Kormee, Ruian Kormee, Ruili Meilian, Shanghai Dachao, Wenzhou Lichuang, Hangzhou Hangcheng, and molds from Ningbo Ruili used in its production. The Company sells certain automotive products to the Ruili Group. The Company also sells parts to Guangzhou Kormee, Shanghai Tabouk, Ruian Kormee, Changchun Kormee and Ruili Meilian. The following related party transactions occurred for the three and six months ended June 30, 2019 and 2018: Three Months Ended Six Months Ended 2019 2018 2019 2018 PURCHASES FROM: Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. $ 2,306,036 $ 1,744,095 $ 5,393,157 $ 1,744,095 Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. 1,087,671 1,057,603 1,750,125 1,413,096 Shanghai Dachao Electric Technology Co., Ltd. 79,064 231,069 314,234 376,687 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 712,616 2,503,163 789,418 4,974,406 Ruili Group Co., Ltd. 6,372,826 2,249,962 8,228,463 3,966,750 Hangzhou Hangcheng Friction Material Co., Ltd. 105,446 - 120,238 - Ningbo Ruili Equipment Co., Ltd. 826,895 - 1,364,196 - Wenzhou Lichuang Automobile Parts Co., Ltd. 5,139,848 5,763,176 7,235,993 7,544,892 Total purchases $ 16,630,402 $ 13,549,068 $ 25,195,824 $ 20,019,926 SALES TO: Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. $ 38,132 $ 54,470 $ 63,268 $ 54,470 Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. 4,100,514 3,461,778 6,857,757 5,814,806 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 353,217 313,940 992,119 843,813 Ruili Group Co., Ltd. 3,198,871 1,664,885 10,041,785 6,076,172 Changchun Kormee Auto Electric Co., Ltd. - - 35,943 - Shanghai Tabouk Auto Components Co., Ltd. 281,198 467,454 627,806 874,320 Total sales $ 7,971,932 $ 5,962,527 $ 18,618,678 $ 13,663,581 As of As of ADVANCES TO RELATED PARTIES Ruili Group Co., Ltd. $ 76,586,592 $ 79,739,417 Total $ 76,586,592 $ 79,739,417 ACCOUNTS RECEIVABLE FROM RELATED PARTY Shanghai Tabouk Auto Components Co., Ltd $ 333,881 $ 261,889 Total $ 333,881 $ 261,889 ACCOUNTS PREPAYMENT TO RELATED PARTY Ningbo Ruili Equipment Co., Ltd. $ 4,421,841 $ 3,670,573 Total $ 4,421,841 $ 3,670,573 ACCOUNTS PAYABLE TO RELATED PARTIES Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. $ 10,798,360 $ 7,877,485 Shanghai Dachao Electric Technology Co., Ltd. 86,972 56,883 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 1,022,708 5,628,155 Wenzhou Lichuang Auto Parts Co., Ltd. 6,931,212 9,898,777 Changchun Kormee Auto Electric Co., Ltd. - 9,206 Hangzhou Hangcheng Friction Material Co., Ltd. 117,241 334,694 Total $ 18,956,493 $ 23,805,200 DUE TO RELATED PARTY Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. $ 7,774,184 $ 5,959,752 Total $ 7,774,184 $ 5,959,752 From time to time, the Company borrows from Ruili Group and its controlled companies for working capital purposes. In order to obtain the loans and mutually benefit both the debtor and creditor of the arrangement, the Company also advances to Ruili Group and its controlled companies in a short term. All the loans from related parties are non-interest bearing, unsecured and due on demand. The advances to Ruili Group are unsecured and due on demand, and the Company charged them an interest on the average balance advanced to them. The Company recorded interests $2,507,133 during the six months ended June 30, 2019, representing an effective interest rate of approximately 6.45%. During the six months ended June 30, 2019, the Company obtained net proceeds of $1,843,951 from a related party. In the same period, Ruili Group repaid the Company net amount of $5,543,910. The Company entered into a lease agreement with Ruili Group. See Note N for more details. The Company provided a guarantee for the credit line granted to Ruili Group by the China Merchants Bank RMB 40,000,000 (approximately $5,828,185) for a period of 12 months starting on October 24, 2016. The credit line was renewed on October 19, 2017 for 6 months. On April 13, 2018, Ruili Group and the bank reached another extension agreement and the guarantee was provided by the Company until April 12, 2019. The Company provided a guarantee for the credit line granted to Ruili Group by Bank of Ningbo in a maximum amount of RMB 210,000,000 (approximately $30,597,972) for the period from July 20, 2018 to July 20, 2028. The Company provided a guarantee for the credit line granted to Ruili Group by China Guangfa Bank in a maximum amount of RMB71,000,000 (approximately $10,345,029) for the period from February 12, 2019 to January 16, 2020. The Company provided a guarantee for the credit line granted to Ruili Group and SHNS Precision by Minsheng Bank in a maximum amount of RMB500,000,000 (approximately $72,730,446) for the period from June 6, 2019 to June 6, 2020. The Company has short term bank loans guaranteed or pledged by related parties. See Note J for more details. |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE E - ACCOUNTS RECEIVABLE, NET Accounts receivable, net consisted of the following: June 30, December 31, 2019 2018 Accounts receivable $ 199,629,288 $ 163,903,305 Less: allowance for doubtful accounts (15,527,994 ) (13,855,508 ) Accounts receivable, net $ 184,101,294 $ 150,047,797 No customer individually accounted for more than 10% of our revenues or accounts receivable for the six months ended June 30, 2019 and 2018. The changes in the allowance for doubtful accounts at June 30, 2019 and December 31, 2018 are summarized as follows: June 30, December 31, 2019 2018 Beginning balance $ 13,855,508 $ 13,927,156 Add: Increase to allowance 1,713,258 610,610 Effects on changes in foreign exchange rate (40,772 ) (682,258 ) Ending balance $ 15,527,994 $ 13,855,508 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE F - INVENTORIES At June 30, 2019 and December 31, 2018, inventories consisted of the following: June 30, December 31, 2019 2018 Raw Materials $ 40,101,063 $ 53,821,973 Work in process 85,168,552 89,516,949 Finished Goods 60,826,780 62,674,252 Less: Write-down of inventories (2,577,123 ) (1,727,747 ) Total Inventory $ 183,519,272 $ 204,285,427 The write-down of inventories amounted to $852,266 and $nil for the six months ended June 30, 2019 and 2018, respectively. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE G - PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment consisted of the following at June 30, 2019 and December 31, 2018: June 30, December 31, 2019 2018 Machinery $ 140,564,252 $ 130,912,861 Molds 1,272,597 1,274,729 Office equipment 4,531,256 3,566,772 Vehicles 6,303,244 5,956,822 Buildings 20,575,660 20,610,137 Construction in progress 20,086,738 8,641,271 Leasehold improvements 462,721 463,497 Sub-Total 193,796,468 171,426,089 Less: Accumulated depreciation (81,460,346 ) (75,372,703 ) Property, plant and equipment, net $ 112,336,122 $ 96,053,386 Depreciation expense charged to operations was $6,395,006 and $5,531,002 for the six months ended June 30, 2019 and 2018, respectively. |
Land Use Rights, Net
Land Use Rights, Net | 6 Months Ended |
Jun. 30, 2019 | |
Land Use Rights [Abstract] | |
LAND USE RIGHTS, NET | NOTE H - LAND USE RIGHTS, NET The balances for land use rights, net, as of June 30, 2019 and December 31, 2018 are as the following: June 30, December 31, 2019 2018 Cost $ 22,246,500 $ 22,283,776 Less: Accumulated amortization (1,500,900 ) (1,159,321 ) Land use rights, net $ 20,745,600 $ 21,124,455 In December 2017, the Company entered into an agreement with the Ministry of Land and Resources, Ruian, to purchase the land use rights for the land located at the intersection of Fengjin Road and Wenhua Road, Binhai New District, Ruian City, Zhejiang Province, China. As of December 31, 2018, the purchase price of RMB 72.02 million (approximately $11.13 million) was fully paid. As of the filing date, the title to the land use rights has not been transferred. The payments were included as prepayment, non-current as of June 30, 2019 and December 31, 2018 on the accompanying consolidated balance sheets. In April 2018, the Company entered into an agreement with the Ministry of Land and Resources, Ruian, to purchase the land use rights for the land located at the intersection of Tengda Road and Wanghai Road, Economic Development District, Ruian City, Zhejiang Province, China. Prepayment of RMB 42.54 million (approximately $6.43 million) was made during the year ended December 31, 2018. During the six months ended June 30, 2019, the Company paid additional amount of RMB 2.04 million (approximately $296,000). The total payments of RMB 44.58 million (approximately $6.48 million) was included in prepayment, non-current as of June 30, 2019 on the accompanying consolidated balance sheets. The title to the land use rights was transferred to the Company in July 2019. Amortization expenses were $347,083 and $301,556 for the six months ended June 30, 2019 and 2018, respectively. |
Deferred Tax Assets
Deferred Tax Assets | 6 Months Ended |
Jun. 30, 2019 | |
Components of Deferred Tax Assets and Liabilities [Abstract] | |
DEFERRED TAX ASSETS | NOTE I - DEFERRED TAX ASSETS Deferred tax assets consisted of the following as of June 30, 2019 and December 31, 2018: June 30, December 31, 2019 2018 Deferred tax assets - current Allowance for doubtful accounts $ 2,489,916 $ 2,205,048 Revenue (net of cost) 182,141 308,046 Unpaid accrued expenses 802,043 501,276 Warranty 1,049,766 1,059,468 Deferred tax assets 4,523,866 4,073,838 Valuation allowance ― ― Net deferred tax assets - current $ 4,523,866 $ 4,073,838 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'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 | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
SHORT TERM BANK LOANS | NOTE J - SHORT TERM BANK LOANS Bank loans represented the following as of June 30, 2019 and December 31, 2018: June 30, December 31, 2019 2018 Secured $ 224,366,412 $ 217,940,471 Total short term bank loan $ 224,366,412 $ 217,940,471 The Company obtained those short term loans from Bank of China, Bank of Ningbo, Agricultural Bank of China, China Minsheng, Industrial Bank and China Construction Bank to finance general working capital as well as new equipment acquisition. Interest rate for the loans outstanding during the three months ended June 30, 2019 ranged from 1.35% to 5.44% per annum. The maturity dates of the loans existing as of June 30, 2019 ranged from July 25, 2019 to June 27, 2020. The interest expenses for short term bank loans, including discount fees, were $2,733,192 and $2,590,729 for the three months ended June 30, 2019 and 2018, respectively. The interest expenses for short term bank loans, including discount fees, were $6,168,608 and $4,885,057 for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, corporate or personal guarantees provided for those bank loans were as follows: $ 5,593,229 Guaranteed by Ruili Group, a related party $ 6,326,094 Guaranteed by Ruili Group, a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 27,637,570 Pledged by Hangzhou Ruili Property Development Co., Ltd., a related party, with its properties; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 32,001,396 Pledged by Ruili Group, a related party, with its land use rights and properties $ 7,273,045 Pledged by the Company with a bank deposit of $7,273,045, which was included in restricted cash on the accompanying unaudited consolidated balance sheets. Also see Note B "RESTRICTED CASH" section. $ 6,909,392 Pledged by the Company with its bank acceptance notes $ 36,365,223 Pledged by Shanghai Ruili, a related party, with its properties; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders; Guaranteed by Shanghai Ruili, a related party $ 75,639,664 Pledged by Shanghai Ruili, a related party, with its properties. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 13,091,480 Pledged by Hangzhou Ruili Binkang Real Estate Development Co. Ltd., a related party, with its properties; Guaranteed by Hangzhou Ruili Property Development Co., Ltd., a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 2,401,559 Guaranteed by Ruili Group, a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders.; Pledged by Ruili Group, a related party, with its properties $ 2,400,105 Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders; Pledged by Ruili Group, a related party, with its properties $ 8,727,654 Pledged by the Company with its property; Guaranteed by Hangzhou Ruili Property Development Co., Ltd., a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders |
Long Term Loans
Long Term Loans | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
LONG TERM LOANS | NOTE K - LONG TERM LOANS June 30, December 31, 2019 2018 Aggregate outstanding principal balance $ 25,144,713 $ 36,165,550 Less: unamortized debt issuance costs (272,200 ) (595,117 ) Less: current portion (21,976,961 ) (21,141,029 ) Non-current portion $ 2,895,552 $ 14,429,404 In November 2017, the Company entered into two identical but independent loan agreements with Far Eastern Horizon Co., Ltd. ("Far Eastern"), each for a term of 36 months and with an effective interest rate of 8.38% per annum, payable monthly in arrears. The total long term obligations under the two agreements amounted to RMB 200,000,000 (approximately $30,608,185), pledged by the Company's equipment in the original cost of RMB 205,690,574 (approximately $31,479,075). The Company paid debt issuance costs in cash of RMB 5,000,000 (approximately $742,324). The repayments of principal totaled $4,941,721 and $5,083,153 for the six months ended June 30, 2019 and 2018, respectively. In November 2017, the Company entered into four independent loan agreements with COSCO Shipping Leasing Co., Ltd. ("COSCO") for a term of 36 months each. Two of the agreements were signed on November 30, 2017 with an effective interest rate of 8.50% per annum, payable monthly in arrears. The other two agreements were entered into on November 15, 2017, with an effective interest rate of 4.31% per annum, payable monthly in arrears. The total long term obligations under the four agreements amounted to RMB 235,000,000 (approximately $35,964,617), pledged by the Company's equipment in the original cost of RMB 238,333,639 (approximately $36,474,800). The Company paid debt issuance costs in cash of RMB7,320,000 (approximately $1,025,248). The repayments of principal totaled $6,137,259 and $7,717,633 for the six months ended June 30, 2019 and 2018, respectively. The interest expenses for long term loans, including the amortization of debt issuance costs, were $976,937 and $1,998,070 for the six months ended June 30, 2019 and 2018, respectively. |
Revenues from Contracts with Cu
Revenues from Contracts with Customers | 6 Months Ended |
Jun. 30, 2019 | |
Revenues from Contracts with Customers [Abstract] | |
REVENUES FROM CONTRACTS WITH CUSTOMERS | NOTE L - REVENUES FROM CONTRACTS WITH CUSTOMERS In accordance with ASC 606, the Company disaggregates revenue from contracts with customers by product type. See Note P for information regarding revenue disaggregation by product type. Deferred revenue is recorded when consideration is received from a customer prior to transferring goods to the customer under the terms of a sales contract. As of June 30, 2019 and December 31, 2018, the Company recorded a deferred revenue liability of $60,023,972 and $51,529,795, respectively, which was presented as "Deposits received from customers" on the accompanying consolidated balance sheets. During six months ended June 30, 2019, the Company recognized $17,587,688 of deferred revenue included in the opening balance of deposits received from customers. The amount was included in sales on the accompanying consolidated statement of income and comprehensive income. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE M - INCOME TAXES During the year ended December 31, 2018, the Company recognized a one-time transition tax of $11,022,985 that represented management's estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company's share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company also recognized related interest and penalty of $587,821 in the year ended December 31, 2018. The Company recognized additional interest and penalty of $107,415 in the six months ended June 30, 2019. The Company elected to pay the one-time transition tax over eight years commencing in 2018. The first installment payment of $881,839 was made during the six months ended June 30, 2019. The actual impact of the U.S. Tax Reform on the Company may differ from management's estimates, and management may update its judgments based on future regulations or guidance issued or changes in the interpretations taken that would adjust the provisional amounts recorded. As of June 30, 2019, $2,558,913 was included in income tax payable as a current liability which the Company believes will be paid within one year and the remaining balance was included in income tax payable, non-current. The 2017 Tax Act also created a new requirement that, for the periods beginning after January 1, 2018, certain income (referred to as global intangible low-taxed income or "GILTI") earned by foreign subsidiaries in excess of a deemed return on tangible assets of foreign corporations must be included in U.S. taxable income. The Company elected to account for GILTI tax in the period the tax is incurred, and therefore included it in estimating the annual effective tax rate. 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 2018, the Joint Venture was awarded the Chinese government's "High-Tech Enterprise" designation for a fourth time, which is valid for three years and it continues to be taxed at the 15% tax rate in 2018, 2019 and 2020. The reconciliation of the effective income tax rate of the Company to the statutory income tax rate in the PRC for the six months ended June 30, 2019 and 2018 is as follows: Six Months Ended Six Months Ended US statutory income tax rate 21.00 % 21.00 % Valuation allowance recognized with respect to the loss in the US company -21.00 % -21.00 % China statutory income tax rate 25.00 % 25.00 % Effects of income tax exemptions and reliefs -10.00 % -10.00 % Effects of additional deduction allowed for R&D expenses -3.96 % -3.43 % Effects of expenses not deductible for tax purposes 1.70 % 2.18 % Other items -0.82 % 0.81 % Effective tax rate 11.92 % 14.56 % 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. The provisions for income taxes for the six months ended June 30, 2019 and 2018 are summarized as follows: Six Months Ended Six Months Ended Current $ 2,659,828 $ 2,201,850 Deferred (461,097 ) 642,343 Total $ 2,198,731 $ 2,844,193 |
Operating Lease
Operating Lease | 6 Months Ended |
Jun. 30, 2019 | |
Leases, Operating [Abstract] | |
OPERATING LEASE | NOTE N - OPERATING LEASE The Company entered into various operating lease agreements for certain of its staff dormitories including a lease agreement with its related party. In December 2006, Ruian entered into a lease agreement with Ruili Group Co., Ltd., a related party, for the lease of two apartment buildings for Ruian's management personnel and staff. The initial lease term was 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 (approximately $305,980). Balance sheet information related to operating leases is as follows: June 30, Operating lease right of use assets 1 $ 1,070,693 Operating lease liabilities, current 2 $ 488,687 Operating lease liabilities, non-current 714,307 Total operating lease liabilities $ 1,202,994 1 Operating lease right of use assets are recorded in other assets, non-current in the accompanying consolidated balance sheets. 2 The current portion of operating lease liabilities is recorded in other current liabilities in the accompanying consolidated balance sheets. For the six months ended June 30, 2019, the Company had operating lease costs of $288,113 and the reduction in operating lease right of use assets was $253,380. Cash paid for amounts included in the measurement of operating lease liabilities was $689,299 during the six months ended June 30, 2019. The weighted-average remaining lease term and the weighted-average discount rate of our leases are as follows: June 30, Weighted-average remaining lease term 3 years Weighted-average discount rate 5.24 % The following table summarizes the maturity of our operating lease liabilities as of June 30, 2019: 2019 (remaining) $ 384,259 2020 305,468 2021 305,468 2022 305,458 2023 and thereafter - Total lease payment 1,300,663 Less imputed interest (97,669 ) Total lease liabilities $ 1,202,994 |
Warranty Claims
Warranty Claims | 6 Months Ended |
Jun. 30, 2019 | |
Warranty Claims [Abstract] | |
WARRANTY CLAIMS | NOTE O - WARRANTY CLAIMS Warranty claims were $7,063,122 and $1,828,168 for the six months ended June 30, 2019 and 2018, respectively. Warranty claims are included in selling and distribution expenses on the accompanying consolidated statements of income and comprehensive income (loss). Accrued warranty expenses are included in the balances of accrued expenses on the accompanying consolidated balance sheets. The movement of accrued warranty expenses for the six months ended June 30, 2019 was as follows: Beginning balance at January 1, 2019 $ 7,063,122 Aggregate increase for new warranties issued during current period 2,044,227 Aggregate reduction for payments made and effect of exchange rate fluctuation 2,108,907 Ending balance at June 30, 2019 $ 6,998,442 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE P - SEGMENT INFORMATION The Company produces brake systems and other related components for different types of commercial vehicles ("Commercial Vehicles Brake Systems"). On August 31, 2010, the Company through Ruian, executed an Asset Purchase Agreement to acquire a segment of the passenger vehicles auto parts business ("Passenger Vehicles Auto Parts", formerly known as "Passenger Vehicles Brake System") 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 Vehicles Auto Parts. For the reporting periods, all of the Company's long-lived assets are located in the PRC. The Company and its subsidiaries do not have long-lived assets in the United States for the reporting periods. Six Months Ended 2019 2018 NET SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 224,606,242 $ 187,578,450 Passenger vehicles auto parts 50,987,164 48,653,184 Net sales $ 275,593,406 $ 236,231,634 INTERSEGMENT SALES Commercial vehicles brake systems $ — $ — Passenger vehicles auto parts — — Intersegment sales $ — $ — GROSS PROFIT Commercial vehicles brake systems $ 57,680,410 $ 42,734,721 Passenger vehicles auto parts 15,109,522 21,895,035 Gross profit $ 72,789,932 $ 64,629,756 Selling and distribution expenses 29,348,397 23,993,870 General and administrative expenses 16,596,319 12,468,189 Research and development expenses 11,932,787 8,922,358 Other operating income, net 4,958,170 4,576,551 Income from operations 19,870,599 23,821,890 Interest income 3,216,616 2,299,844 Government grants 3,499,845 743,525 Other income 95,029 202,693 Interest expenses (7,145,545 ) (6,883,127 ) Exchange differences (523,130 ) 489,922 Other expenses (568,691 ) (1,145,085 ) Income before income tax expense $ 18,444,723 $ 19,529,662 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 22,914,212 $ 27,215,974 Passenger vehicles auto parts 4,564,157 6,496,986 Total $ 27,478,369 $ 33,712,960 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 5,776,731 $ 4,650,734 Passenger vehicles auto parts 1,150,636 1,181,824 Total $ 6,927,367 $ 5,832,558 June 30, December 31, TOTAL ASSETS Commercial vehicles brake systems $ 644,665,601 $ 492,348,129 Passenger vehicles auto parts 128,407,430 89,967,813 Total $ 773,073,031 $ 582,315,942 June 30, December 31, LONG LIVED ASSETS Commercial vehicles brake systems $ 164,704,260 $ 106,779,681 Passenger vehicles auto parts 32,806,545 19,512,076 Total $ 197,510,805 $ 126,291,757 |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | NOTE Q - CONTINGENCIES (1) 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 rights 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 (approximately $745,220). This amount was determined based on a 3% tax rate on the consideration paid for the Dongshan Facility in the transaction, which the Company considered as the most probable amount of tax liability. The Dongshan Facility was transferred back to Ruili Group on May 5, 2016. (2) The Company purchased the Development Zone Facility from Ruili Group on May 5, 2016. As of the filing date, the Company has not yet obtained the land use rights certificate or the property ownership certificate for the building of the Development Zone Facility. The Company reserved the relevant tax amount of RMB 15,030,000 (approximately $2,300,205). This amount was determined based on a 3% tax rate on the consideration paid for the Development Zone Facility, which the Company considered as the most probable amount of tax liability. (3) The information of lease commitments is provided in Note N. (4) The information of guarantees and assets pledged is provided in Note D. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE R - SUBSEQUENT EVENTS During the subsequent period, the Company obtained a short term loan in an amount of approximately $4.4 million from China Construction Bank. Interest rate was 4.35% per annum. The maturity date of this loan existing as of the filing date is July 23, 2020. The Company pledged its property to obtain this loan from China Construction Bank. In July 2019, the Company entered into three loan agreements with COSCO Shipping Leasing Co., Ltd. ("COSCO") for a term of 36 months each. The total long term obligations under the three agreements amounted to RMB 180,000,000 (approximately $26.2 million). Total proceeds under these loan agreements totaled $21.8 million in the form of bank acceptance notes. In the same period, the Company repaid loan principals and interest expenses in the total amount of approximately $7.1 million to China Construction Bank and Industrial Bank Co., Ltd. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
ACCOUNTING METHOD | a. ACCOUNTING METHOD The Company uses the accrual method of accounting for financial statement and tax return purposes. |
USE OF ESTIMATES | b. 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 periods. 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 | c. FAIR VALUE OF FINANCIAL INSTRUMENTS For certain of the Company's financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, bank acceptance notes from customers, inventories, current prepayments, current portion of deposits on loan agreements, other current assets, accounts payable and bank acceptance notes to vendors, short term bank loans, deposit received from customers, current portion of long term loans, deferred income, income tax payable, accrued expenses and other current liabilities, 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. |
RESTRICTED CASH | d. RESTRICTED CASH Restricted cash, current consists of bank deposits used to pledge bank acceptance notes, and deposits for obtaining letters of credit from a local bank. Restricted cash, non-current consists of deposits guaranteed for construction projects and the non-current portion of certain bank deposits used to pledge for bank acceptance notes. |
RELATED PARTY TRANSACTIONS | e. RELATED PARTY 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. |
BANK ACCEPTANCE NOTES RECEIVABLE FROM CUSTOMERS | f. BANK ACCEPTANCE NOTES RECEIVABLE FROM CUSTOMERS Bank acceptance notes from customers, generally due within six months and with specific payment terms and definitive due dates, are comprised of the notes issued by some customers to pay certain outstanding receivable balances to the Company, and the notes issued by the customers of related parties and transferred to the Company as loans from related parties or repayments from related parties. Bank acceptance notes do not bear interest. As of June 30, 2019 and December 31, 2018, bank acceptance notes receivable in the amount of $68,238,401 and $58,458,890, respectively, were pledged to banks to issue either short term bank loans or bank acceptance notes to vendors. The banks charge discount fees if the Company chooses to discount the bank acceptance notes for cash before the maturity of the notes and such discount fees are included in interest expenses in the accompanying unaudited consolidated statements of income and comprehensive income (loss). |
FOREIGN CURRENCY TRANSLATION | g. FOREIGN CURRENCY TRANSLATION The Company maintains its books and accounting records in RMB, the currency of the PRC. The Company's functional currency is also RMB. The Company has adopted FASB ASC 830-30 in translating financial statement amounts from RMB to the Company's reporting currency, United States dollars ("US$"). All assets and liabilities are translated at the current rate. The stockholders' 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. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of nature of relationship under related party transactions | Name of Related Party Nature of Relationship Xiao Ping Zhang Principal shareholder, Chairman of the Board and Chief Executive Officer Shu Ping Chi Shareholder, member of the Board, wife of Xiao Ping Zhang Xiao Feng Zhang Shareholder, member of the Board, brother of Xiao Ping Zhang Ruili Group Co., Ltd. ("Ruili Group") 10% shareholder of Joint Venture and is collectively controlled by Xiao Ping Zhang, Shu Ping Chi, and Xiao Feng Zhang Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. ("Guangzhou Kormee") Controlled by Ruili Group Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. ("Ruian Kormee" and formerly known as "Ruian Kormee Automobile Braking Co., Ltd.") Wholly controlled by Guangzhou Kormee Changchun Kormee Auto Electric Co., Ltd. ("Changchun Kormee") Wholly controlled by Guangzhou Kormee Shanghai Dachao Electric Technology Co., Ltd. ("Shanghai Dachao") Ruili Group holds 66% of the equity interests in Shanghai Dachao Ruili MeiLian Air Management Systems (LangFang) Co., Ltd. ("Ruili Meilian") Controlled by Ruili Group Wenzhou Lichuang Automobile Parts Co., Ltd. ("Wenzhou Lichuang") Controlled by Ruili Group Ningbo Ruili Equipment Co., Ltd. ("Ningbo Ruili") Controlled by Ruili Group Shanghai Ruili Real Estate Development Co., Ltd. ("Shanghai Ruili") Wholly owned by Ruili Group Kunshan Yuetu Real Estate Development Co., Ltd. ("Kunshan Yuetu") Collectively owned by Ruili Group and Shu Ping Chi Shanghai Tabouk Auto Components Co., Ltd. ("Shanghai Tabouk") Collectively owned by Xiao Feng Zhang and Xiao Ping Zhang Hangzhou Ruili Property Development Co., Ltd. Collectively owned by Ruili Group and Xiao Ping Zhang Hangzhou Hangcheng Friction Material Co., Ltd. ("Hangzhou Hangcheng") Controlled by Ruili Group Hangzhou Ruili Binkang Real Estate Development Co. Ltd. Controlled by Hangzhou Ruili Property Development Co., Ltd. SHNS Precision Die Casting (Yangzhou) Co. Ltd. ("SHNS Precision") Controlled by Ruili Group |
Schedule of related party transactions | Three Months Ended Six Months Ended 2019 2018 2019 2018 PURCHASES FROM: Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. $ 2,306,036 $ 1,744,095 $ 5,393,157 $ 1,744,095 Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. 1,087,671 1,057,603 1,750,125 1,413,096 Shanghai Dachao Electric Technology Co., Ltd. 79,064 231,069 314,234 376,687 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 712,616 2,503,163 789,418 4,974,406 Ruili Group Co., Ltd. 6,372,826 2,249,962 8,228,463 3,966,750 Hangzhou Hangcheng Friction Material Co., Ltd. 105,446 - 120,238 - Ningbo Ruili Equipment Co., Ltd. 826,895 - 1,364,196 - Wenzhou Lichuang Automobile Parts Co., Ltd. 5,139,848 5,763,176 7,235,993 7,544,892 Total purchases $ 16,630,402 $ 13,549,068 $ 25,195,824 $ 20,019,926 SALES TO: Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. $ 38,132 $ 54,470 $ 63,268 $ 54,470 Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. 4,100,514 3,461,778 6,857,757 5,814,806 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 353,217 313,940 992,119 843,813 Ruili Group Co., Ltd. 3,198,871 1,664,885 10,041,785 6,076,172 Changchun Kormee Auto Electric Co., Ltd. - - 35,943 - Shanghai Tabouk Auto Components Co., Ltd. 281,198 467,454 627,806 874,320 Total sales $ 7,971,932 $ 5,962,527 $ 18,618,678 $ 13,663,581 As of As of ADVANCES TO RELATED PARTIES Ruili Group Co., Ltd. $ 76,586,592 $ 79,739,417 Total $ 76,586,592 $ 79,739,417 ACCOUNTS RECEIVABLE FROM RELATED PARTY Shanghai Tabouk Auto Components Co., Ltd $ 333,881 $ 261,889 Total $ 333,881 $ 261,889 ACCOUNTS PREPAYMENT TO RELATED PARTY Ningbo Ruili Equipment Co., Ltd. $ 4,421,841 $ 3,670,573 Total $ 4,421,841 $ 3,670,573 ACCOUNTS PAYABLE TO RELATED PARTIES Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. $ 10,798,360 $ 7,877,485 Shanghai Dachao Electric Technology Co., Ltd. 86,972 56,883 Ruili MeiLian Air Management System (LangFang) Co., Ltd. 1,022,708 5,628,155 Wenzhou Lichuang Auto Parts Co., Ltd. 6,931,212 9,898,777 Changchun Kormee Auto Electric Co., Ltd. - 9,206 Hangzhou Hangcheng Friction Material Co., Ltd. 117,241 334,694 Total $ 18,956,493 $ 23,805,200 DUE TO RELATED PARTY Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. $ 7,774,184 $ 5,959,752 Total $ 7,774,184 $ 5,959,752 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Schedule of accounts receivable | June 30, December 31, 2019 2018 Accounts receivable $ 199,629,288 $ 163,903,305 Less: allowance for doubtful accounts (15,527,994 ) (13,855,508 ) Accounts receivable, net $ 184,101,294 $ 150,047,797 |
Schedule of allowance for doubtful accounts | June 30, December 31, 2019 2018 Beginning balance $ 13,855,508 $ 13,927,156 Add: Increase to allowance 1,713,258 610,610 Effects on changes in foreign exchange rate (40,772 ) (682,258 ) Ending balance $ 15,527,994 $ 13,855,508 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | June 30, December 31, 2019 2018 Raw Materials $ 40,101,063 $ 53,821,973 Work in process 85,168,552 89,516,949 Finished Goods 60,826,780 62,674,252 Less: Write-down of inventories (2,577,123 ) (1,727,747 ) Total Inventory $ 183,519,272 $ 204,285,427 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | June 30, December 31, 2019 2018 Machinery $ 140,564,252 $ 130,912,861 Molds 1,272,597 1,274,729 Office equipment 4,531,256 3,566,772 Vehicles 6,303,244 5,956,822 Buildings 20,575,660 20,610,137 Construction in progress 20,086,738 8,641,271 Leasehold improvements 462,721 463,497 Sub-Total 193,796,468 171,426,089 Less: Accumulated depreciation (81,460,346 ) (75,372,703 ) Property, plant and equipment, net $ 112,336,122 $ 96,053,386 |
Land Use Rights, Net (Tables)
Land Use Rights, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Land Use Rights [Abstract] | |
Schedule of land use rights, net | June 30, December 31, 2019 2018 Cost $ 22,246,500 $ 22,283,776 Less: Accumulated amortization (1,500,900 ) (1,159,321 ) Land use rights, net $ 20,745,600 $ 21,124,455 |
Deferred Tax Assets (Tables)
Deferred Tax Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Components of Deferred Tax Assets and Liabilities [Abstract] | |
Schedule of deferred tax assets | June 30, December 31, 2019 2018 Deferred tax assets - current Allowance for doubtful accounts $ 2,489,916 $ 2,205,048 Revenue (net of cost) 182,141 308,046 Unpaid accrued expenses 802,043 501,276 Warranty 1,049,766 1,059,468 Deferred tax assets 4,523,866 4,073,838 Valuation allowance ― ― Net deferred tax assets - current $ 4,523,866 $ 4,073,838 |
Short Term Bank Loans (Tables)
Short Term Bank Loans (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of bank loans | June 30, December 31, 2019 2018 Secured $ 224,366,412 $ 217,940,471 Total short term bank loan $ 224,366,412 $ 217,940,471 |
Schedule of personal or corporate guarantees | $ 5,593,229 Guaranteed by Ruili Group, a related party $ 6,326,094 Guaranteed by Ruili Group, a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 27,637,570 Pledged by Hangzhou Ruili Property Development Co., Ltd., a related party, with its properties; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 32,001,396 Pledged by Ruili Group, a related party, with its land use rights and properties $ 7,273,045 Pledged by the Company with a bank deposit of $7,273,045, which was included in restricted cash on the accompanying unaudited consolidated balance sheets. Also see Note B "RESTRICTED CASH" section. $ 6,909,392 Pledged by the Company with its bank acceptance notes $ 36,365,223 Pledged by Shanghai Ruili, a related party, with its properties; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders; Guaranteed by Shanghai Ruili, a related party $ 75,639,664 Pledged by Shanghai Ruili, a related party, with its properties. Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 13,091,480 Pledged by Hangzhou Ruili Binkang Real Estate Development Co. Ltd., a related party, with its properties; Guaranteed by Hangzhou Ruili Property Development Co., Ltd., a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders $ 2,401,559 Guaranteed by Ruili Group, a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders.; Pledged by Ruili Group, a related party, with its properties $ 2,400,105 Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders; Pledged by Ruili Group, a related party, with its properties $ 8,727,654 Pledged by the Company with its property; Guaranteed by Hangzhou Ruili Property Development Co., Ltd., a related party; Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, both the Company's principal stockholders |
Long Term Loans (Tables)
Long Term Loans (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long term loan | June 30, December 31, 2019 2018 Aggregate outstanding principal balance $ 25,144,713 $ 36,165,550 Less: unamortized debt issuance costs (272,200 ) (595,117 ) Less: current portion (21,976,961 ) (21,141,029 ) Non-current portion $ 2,895,552 $ 14,429,404 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation effective income tax rate | Six Months Ended Six Months Ended US statutory income tax rate 21.00 % 21.00 % Valuation allowance recognized with respect to the loss in the US company -21.00 % -21.00 % China statutory income tax rate 25.00 % 25.00 % Effects of income tax exemptions and reliefs -10.00 % -10.00 % Effects of additional deduction allowed for R&D expenses -3.96 % -3.43 % Effects of expenses not deductible for tax purposes 1.70 % 2.18 % Other items -0.82 % 0.81 % Effective tax rate 11.92 % 14.56 % |
Schedule of provisions for income taxes | Six Months Ended Six Months Ended Current $ 2,659,828 $ 2,201,850 Deferred (461,097 ) 642,343 Total $ 2,198,731 $ 2,844,193 |
Operating Lease with Related Pa
Operating Lease with Related Party (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases, Operating [Abstract] | |
Schedule of Balance sheet information related to operating leases | June 30, Operating lease right of use assets 1 $ 1,070,693 Operating lease liabilities, current 2 $ 488,687 Operating lease liabilities, non-current 714,307 Total operating lease liabilities $ 1,202,994 1 Operating lease right of use assets are recorded in other assets, non-current in the accompanying consolidated balance sheets. 2 The current portion of operating lease liabilities is recorded in other current liabilities in the accompanying consolidated balance sheets. |
Schedule of operating lease of weighted-average | June 30, Weighted-average remaining lease term 3 years Weighted-average discount rate 5.24 % |
Schedule of maturity of our operating lease liabilities | 2019 (remaining) $ 384,259 2020 305,468 2021 305,468 2022 305,458 2023 and thereafter - Total lease payment 1,300,663 Less imputed interest (97,669 ) Total lease liabilities $ 1,202,994 |
Warranty Claims (Tables)
Warranty Claims (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Warranty Claims [Abstract] | |
Schedule of accrued warranty expenses | Beginning balance at January 1, 2019 $ 7,063,122 Aggregate increase for new warranties issued during current period 2,044,227 Aggregate reduction for payments made and effect of exchange rate fluctuation 2,108,907 Ending balance at June 30, 2019 $ 6,998,442 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment Information, by segment | Six Months Ended 2019 2018 NET SALES TO EXTERNAL CUSTOMERS Commercial vehicles brake systems $ 224,606,242 $ 187,578,450 Passenger vehicles auto parts 50,987,164 48,653,184 Net sales $ 275,593,406 $ 236,231,634 INTERSEGMENT SALES Commercial vehicles brake systems $ — $ — Passenger vehicles auto parts — — Intersegment sales $ — $ — GROSS PROFIT Commercial vehicles brake systems $ 57,680,410 $ 42,734,721 Passenger vehicles auto parts 15,109,522 21,895,035 Gross profit $ 72,789,932 $ 64,629,756 Selling and distribution expenses 29,348,397 23,993,870 General and administrative expenses 16,596,319 12,468,189 Research and development expenses 11,932,787 8,922,358 Other operating income, net 4,958,170 4,576,551 Income from operations 19,870,599 23,821,890 Interest income 3,216,616 2,299,844 Government grants 3,499,845 743,525 Other income 95,029 202,693 Interest expenses (7,145,545 ) (6,883,127 ) Exchange differences (523,130 ) 489,922 Other expenses (568,691 ) (1,145,085 ) Income before income tax expense $ 18,444,723 $ 19,529,662 CAPITAL EXPENDITURE Commercial vehicles brake systems $ 22,914,212 $ 27,215,974 Passenger vehicles auto parts 4,564,157 6,496,986 Total $ 27,478,369 $ 33,712,960 DEPRECIATION AND AMORTIZATION Commercial vehicles brake systems $ 5,776,731 $ 4,650,734 Passenger vehicles auto parts 1,150,636 1,181,824 Total $ 6,927,367 $ 5,832,558 June 30, December 31, TOTAL ASSETS Commercial vehicles brake systems $ 644,665,601 $ 492,348,129 Passenger vehicles auto parts 128,407,430 89,967,813 Total $ 773,073,031 $ 582,315,942 June 30, December 31, LONG LIVED ASSETS Commercial vehicles brake systems $ 164,704,260 $ 106,779,681 Passenger vehicles auto parts 32,806,545 19,512,076 Total $ 197,510,805 $ 126,291,757 |
Description of Business (Detail
Description of Business (Details) | Jun. 30, 2019 | Jun. 30, 2018 | Nov. 11, 2009 | Jan. 17, 2004 |
Description Of Business [Line Items] | ||||
Ownership percentage | 10.00% | 10.00% | ||
Investor [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 10.00% | |||
Mgr Hong Kong Limited [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 30.00% | |||
Sorl International Holding Ltd [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 60.00% | |||
Ruili Group Co Ltd [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 10.00% | |||
Fairford [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 90.00% | |||
Ruian Joint Venture [Member] | ||||
Description Of Business [Line Items] | ||||
Ownership percentage | 90.00% |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Details Textual) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Basis of Presentation and Significant Accounting Policies (Textual) | ||
Notes receivable amount | $ 68,238,401 | $ 58,458,890 |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Details) - USD ($) | Jun. 30, 2019 | Jan. 31, 2019 |
Recently Issued Accounting Pronouncements (Textual) | ||
Operating lease liabilities | $ 689,299 | $ 1,600,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Xiao Ping Zhang [Member] | |
Nature of Common Ownership or Management Control Relationships | Principal shareholder, Chairman of the Board and Chief Executive Officer |
Shu Ping Chi [Member] | |
Nature of Common Ownership or Management Control Relationships | Shareholder, member of the Board, wife of Xiao Ping Zhang |
Xiao Feng Zhang [Member] | |
Nature of Common Ownership or Management Control Relationships | Shareholder, member of the Board, brother of Xiao Ping Zhang |
Ruili Group [Member] | |
Nature of Common Ownership or Management Control Relationships | 10% shareholder of Joint Venture and is collectively controlled by Xiao Ping Zhang, Shu Ping Chi, and Xiao Feng Zhang |
Guangzhou Kormee [Member] | |
Nature of Common Ownership or Management Control Relationships | Controlled by Ruili Group |
Ruian Kormee [Member] | |
Nature of Common Ownership or Management Control Relationships | Wholly controlled by Guangzhou Kormee |
Shanghai Dachao Electric Technology Co Ltd [Member] | |
Nature of Common Ownership or Management Control Relationships | Ruili Group holds 49% of the equity interests in Shanghai Dachao |
Ruili MeiLian Air Management Systems (LangFang) Co., Ltd. (“Ruili Meilian”) [Member] | |
Nature of Common Ownership or Management Control Relationships | Controlled by Ruili Group |
Wenzhou Lichuang [Member] | |
Nature of Common Ownership or Management Control Relationships | Controlled by Ruili Group |
Ningbo Ruili Equipment Co., Ltd. [Member] | |
Nature of Common Ownership or Management Control Relationships | Controlled by Ruili Group |
Shanghai Ruili Real Estate Development Co., Ltd. [Member] | |
Nature of Common Ownership or Management Control Relationships | Wholly owned by Ruili Group |
Kunshan Yuetu Real Estate Development Co., Ltd. [Member] | |
Nature of Common Ownership or Management Control Relationships | Collectively owned by Ruili Group and Shu Ping Chi |
Shanghai Tabouk Auto Components Co Ltd [Member] | |
Nature of Common Ownership or Management Control Relationships | Collectively owned by Xiao Feng Zhang and Xiao Ping Zhang |
Hangzhou Ruili [Member] | |
Nature of Common Ownership or Management Control Relationships | Collectively owned by Ruili Group and Xiao Ping Zhang |
Changchun Kormee [Member] | |
Nature of Common Ownership or Management Control Relationships | Wholly controlled by Guangzhou Kormee |
Hangzhou Hangcheng [Member] | |
Nature of Common Ownership or Management Control Relationships | Controlled by Ruili Group |
Hangzhou Ruili Binkang Real Estate Development Co. Ltd [Member] | |
Nature of Common Ownership or Management Control Relationships | Controlled by Hangzhou Ruili Property Development Co., Ltd. |
SHNS Precision Die Casting (Yangzhou) Co. Ltd. (“SHNS Precision”) [Member] | |
Nature of Common Ownership or Management Control Relationships | Controlled by Ruili Group |
Related Party Transactions (D_2
Related Party Transactions (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | $ 16,630,402 | $ 13,549,068 | $ 25,195,824 | $ 20,019,926 |
Total sales | 7,971,932 | 5,962,527 | 18,618,678 | 13,663,581 |
Guangzhou Ruili Kormee Automotive Electronic Control Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 2,306,036 | 1,744,095 | 5,393,157 | 1,744,095 |
Total sales | 4,100,514 | 3,461,778 | 6,857,757 | 5,814,806 |
Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 1,087,671 | 1,057,603 | 1,750,125 | 1,413,096 |
Total sales | 38,132 | 54,470 | 63,268 | 54,470 |
Shanghai Dacho Electric Technology Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 79,064 | 231,069 | 314,234 | 376,687 |
Ruili MeiLian Air Management System LangFang Co., Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 712,616 | 2,503,163 | 789,418 | 4,974,406 |
Total sales | 353,217 | 313,940 | 992,119 | 843,813 |
Ruili Group Co Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 6,372,826 | 2,249,962 | 8,228,643 | 3,966,750 |
Total sales | 3,198,871 | 1,664,885 | 10,041,785 | 6,076,172 |
HangzhouHangcheng Friction Material Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 105,446 | 120,238 | ||
Ningbo Ruili Equipment Co., Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 826,895 | 1,364,196 | ||
Wenzhou Lichuang Auto Parts Co Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | 5,139,848 | 5,763,176 | 7,235,993 | 7,544,892 |
Shanghai Tabouk Auto Components Co Ltd [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total sales | $ 281,198 | 467,454 | $ 627,806 | $ 874,320 |
Changchun Kormee [Member] | ||||
Related Party Transaction [Line Items] | ||||
PURCHASES FROM | ||||
Total sales |
Related Party Transactions (D_3
Related Party Transactions (Details 2) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
ADVANCES TO RELATED PARTIES | $ 76,586,592 | $ 79,739,417 |
Ruili Group Co Ltd [Member] | ||
ADVANCES TO RELATED PARTIES | $ 76,589,592 | $ 79,739,417 |
Related Party Transactions (D_4
Related Party Transactions (Details 3) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
ACCOUNTS RECEIVABLE FROM RELATED PARTY | $ 333,881 | $ 261,889 |
Shanghai Tabouk Auto Components Co Ltd [Member] | ||
ACCOUNTS RECEIVABLE FROM RELATED PARTY | $ 333,881 | $ 261,889 |
Related Party Transactions (D_5
Related Party Transactions (Details 4) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
PREPAYMENT TO RELATED PARTY | $ 4,421,841 | $ 3,670,573 |
Ningbo Ruili Equipment Co., Ltd. [Member] | ||
PREPAYMENT TO RELATED PARTY | $ 4,421,841 | $ 3,670,573 |
Related Party Transactions (D_6
Related Party Transactions (Details 5) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
ACCOUNTS PAYABLE TO RELATED PARTIES | $ 18,956,493 | $ 23,805,200 |
Guangzhou Ruili Kormee Automotive Electronic Control Technology Co Ltd [Member] | ||
ACCOUNTS PAYABLE TO RELATED PARTIES | 10,798,360 | 7,877,485 |
Shanghai Dachao Electric Technology Co Ltd [Member] | ||
ACCOUNTS PAYABLE TO RELATED PARTIES | 86,972 | 56,883 |
Ruili MeiLian Air Management System (LangFang) Co., Ltd. [Member] | ||
ACCOUNTS PAYABLE TO RELATED PARTIES | 1,022,708 | 5,628,155 |
Wenzhou Lichuang Auto Parts Co Ltd [Member] | ||
ACCOUNTS PAYABLE TO RELATED PARTIES | 6,931,212 | 9,898,777 |
Changchun Kormee [Member] | ||
ACCOUNTS PAYABLE TO RELATED PARTIES | 9,206 | |
Hangzhou Hangcheng Friction Material Co., Ltd. [Member] | ||
ACCOUNTS PAYABLE TO RELATED PARTIES | $ 117,241 | $ 334,694 |
Related Party Transactions (D_7
Related Party Transactions (Details 6) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
DUE TO RELATED PARTY | $ 7,774,184 | $ 5,959,752 |
Wenzhou Ruili Kormee Automotive Electronics Co., Ltd. [Member] | ||
DUE TO RELATED PARTY | $ 7,774,184 | $ 5,959,752 |
Related Party Transactions (D_8
Related Party Transactions (Details Textual) | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019CNY (¥) | |
Related Party Transactions (Textual) | |||
Repayments of related party debt | $ 328,443,191 | ||
Bank acceptance notes | 1,843,951 | ||
Repayments in cash | $ 5,543,910 | ||
Interests received from related parties | 2,507,133 | ||
Advanced to related parties | $ 190,438,634 | ||
Interest rate | 6.45% | ||
Wenzhou Lichuang [Member] | |||
Related Party Transactions (Textual) | |||
Bank deposits | $ 72,730,446 | ||
Wenzhou Lichuang [Member] | RMB [Member] | |||
Related Party Transactions (Textual) | |||
Bank deposits | 500,000,000 | ||
China Guangfa Bank [Member] | Ruili Group Co Ltd [Member] | |||
Related Party Transactions (Textual) | |||
Guarantee amount | 10,345,029 | ||
China Guangfa Bank [Member] | Ruili Group Co Ltd [Member] | RMB [Member] | |||
Related Party Transactions (Textual) | |||
Guarantee amount | ¥ | ¥ 71,000,000 | ||
Credit Line by China Merchants Bank [Member] | Ruili Group Co Ltd [Member] | |||
Related Party Transactions (Textual) | |||
Guarantee amount | 5,828,185 | ||
Credit line granted | $ 30,597,972 | ||
Credit Line by China Merchants Bank [Member] | Ruili Group Co Ltd [Member] | RMB [Member] | |||
Related Party Transactions (Textual) | |||
Guarantee amount | ¥ | 40,000,000 | ||
Credit line granted | ¥ | ¥ 210,000,000 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Accounts receivable | $ 199,629,288 | $ 163,903,305 |
Less: allowance for doubtful accounts | (15,527,994) | (13,855,508) |
Accounts receivable, net | $ 184,101,294 | $ 150,047,797 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details 1) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Beginning balance | $ 13,855,508 | $ 13,927,156 |
Add: Increase to allowance | 1,713,258 | 610,610 |
Effects on changes in foreign exchange rate | (40,772) | (682,258) |
Ending balance | $ 15,527,994 | $ 13,855,508 |
Accounts Receivable, Net (Det_3
Accounts Receivable, Net (Details Textual) | Jun. 30, 2019 | Jun. 30, 2018 |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Ownership percentage | 10.00% | 10.00% |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 40,101,063 | $ 53,821,973 |
Work in process | 85,168,552 | 89,516,949 |
Finished goods | 80,826,780 | 62,674,252 |
Less: Write-down of inventories | (2,577,123) | (1,727,747) |
Total Inventory | $ 183,519,272 | $ 204,285,427 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Inventories (Textual) | ||
Write-down of potentially obsolete or slow-moving inventories | $ 852,266 | $ 852,266 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Sub-Total | $ 193,796,468 | $ 171,426,089 |
Less: Accumulated depreciation | (81,460,346) | (75,372,703) |
Property, plant and equipment, net | 112,336,122 | 96,053,386 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 140,564,252 | 130,912,861 |
Tools, Dies and Molds [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 1,272,597 | 1,274,729 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 4,531,256 | 3,566,772 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 6,303,244 | 5,956,822 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 20,575,660 | 20,610,137 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | 20,086,738 | 8,641,271 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Sub-Total | $ 462,721 | $ 463,497 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 6,395,006 | $ 5,531,002 |
Land Use Rights, Net (Details)
Land Use Rights, Net (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Land Use Rights [Abstract] | ||
Cost | $ 22,249,500 | $ 22,283,776 |
Less: Accumulated amortization | (1,500,900) | (1,159,321) |
Land use rights, net | $ 20,745,600 | $ 21,124,455 |
Land Use Rights, Net (Details T
Land Use Rights, Net (Details Textual) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2019CNY (¥) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | |
Land Use Rights [Line Items] | |||||
Amortization expense, land use rights | $ 347,083 | $ 301,556 | |||
Intersection Tengda Road [Member] | |||||
Land Use Rights [Line Items] | |||||
Purchase price of land use rights | 64,800,000 | $ 6,430,000 | |||
RMB [Member] | Intersection Tengda Road [Member] | |||||
Land Use Rights [Line Items] | |||||
Purchase price of land use rights | ¥ | ¥ 445,800,000 | ¥ 42,540,000 | |||
Use Rights [Member] | |||||
Land Use Rights [Line Items] | |||||
Payments to acquire intangible assets | $ 11,130,000 | ||||
Purchase price of land use rights | $ 296,000 | ||||
Use Rights [Member] | RMB [Member] | |||||
Land Use Rights [Line Items] | |||||
Payments to acquire intangible assets | ¥ | 72,020,000 | ||||
Purchase price of land use rights | ¥ | ¥ 20,400,000 |
Deferred Tax Assets (Details)
Deferred Tax Assets (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Deferred tax assets | ||
Allowance for doubtful accounts | $ 2,489,916 | $ 2,205,048 |
Revenue (net of cost) | 182,141 | 308,046 |
Unpaid accrued expenses | 802,043 | 501,276 |
Warranty | 1,049,766 | 1,059,468 |
Deferred tax assets | 4,523,866 | 4,073,838 |
Valuation allowance | ||
Net deferred tax assets | $ 4,523,866 | $ 4,073,838 |
Short Term Bank Loans (Details)
Short Term Bank Loans (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Total short term bank loan | $ 224,366,412 | $ 217,940,471 |
Secured [Member] | ||
Total short term bank loan | $ 224,366,412 | $ 217,940,471 |
Short Term Bank Loans (Details
Short Term Bank Loans (Details 1) | Jun. 30, 2019USD ($) |
Guaranteed by Ruili Group [Member] | |
Corporate or personal guarantees | $ 5,593,229 |
Guaranteed by Ruili Group [Member] | |
Corporate or personal guarantees | 6,326,094 |
Pledged by Hangzhou Ruili Property Development Co Ltd [Member] | |
Corporate or personal guarantees | 27,637,570 |
Pledged by Ruili Group [Member] | |
Corporate or personal guarantees | 32,001,396 |
Pledged by the Company with a bank deposit [Member] | |
Corporate or personal guarantees | 7,273,045 |
Pledged by the Company with its bank acceptance notes [Member] | |
Corporate or personal guarantees | 6,909,392 |
Pledged by Shanghai Ruili, a related party [Member] | |
Corporate or personal guarantees | 36,365,223 |
Pledged by Shanghai Ruili, a related party [Member] | |
Corporate or personal guarantees | 75,639,664 |
Pledged by Hangzhou Ruili Binkang Real Estate Development Co. Ltd, a related party [Member] | |
Corporate or personal guarantees | 13,091,480 |
Guaranteed by Ruili Group, a related party [Member] | |
Corporate or personal guarantees | 2,401,559 |
Guaranteed by Mr. Xiao Ping Zhang and Ms. Shu Ping Chi, [Member] | |
Corporate or personal guarantees | 2,400,105 |
Hangzhou Ruili Property Development Co, Ltd., [Member] | |
Corporate or personal guarantees | $ 8,727,654 |
Short Term Bank Loans (Detail_2
Short Term Bank Loans (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Short-term Debt [Line Items] | ||||
Bank deposits | $ 7,273,045 | $ 7,273,045 | ||
Notes Payable to Banks [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest expenses | $ 2,733,192 | $ 2,590,729 | $ 6,168,608 | $ 4,885,057 |
Maturity dates of loans | The maturity dates of the loans existing as of June 30, 2019 ranged from July 25, 2019 to June 27, 2020. |
Long Term Loans (Details)
Long Term Loans (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Aggregate outstanding principal balance | $ 25,144,713 | $ 36,165,550 |
Less: unamortized debt issuance costs | (272,200) | (595,117) |
Less: current portion | (21,976,961) | (21,141,029) |
Non-current portion | $ 2,895,552 | $ 14,429,404 |
Long Term Loans (Details Textua
Long Term Loans (Details Textual) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Nov. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Nov. 15, 2017 | |
Long Term Loans (Textual) | ||||
Interest expense | $ 976,937 | $ 1,998,070 | ||
Amortization of debt issuance costs | 325,413 | 697,633 | ||
COSCO Shipping Leasing Co Ltd [Member] | ||||
Long Term Loans (Textual) | ||||
Debt instrument term | 36 months | |||
Debt instrument interest rate percentage | 8.50% | 4.31% | ||
Total long term obligations | $ 35,964,617 | |||
Pledged by the Company's equipment in the original cost | 36,474,800 | |||
Payment of debt issuance costs | 1,025,248 | 6,137,259 | 7,717,633 | |
COSCO Shipping Leasing Co Ltd [Member] | RMB [Member] | ||||
Long Term Loans (Textual) | ||||
Total long term obligations | 235,000,000 | |||
Pledged by the Company's equipment in the original cost | 238,333,639 | |||
Payment of debt issuance costs | $ 7,320,000 | |||
Far Eastern Horizon Co Ltd [Member] | ||||
Long Term Loans (Textual) | ||||
Debt instrument term | 36 months | |||
Debt instrument interest rate percentage | 8.38% | |||
Total long term obligations | $ 30,608,185 | |||
Pledged by the Company's equipment in the original cost | 31,479,075 | |||
Payment of debt issuance costs | 742,324 | $ 4,941,721 | $ 5,083,153 | |
Far Eastern Horizon Co Ltd [Member] | RMB [Member] | ||||
Long Term Loans (Textual) | ||||
Total long term obligations | 200,000,000 | |||
Pledged by the Company's equipment in the original cost | 205,690,574 | |||
Payment of debt issuance costs | $ 5,000,000 |
Revenues from Contracts with _2
Revenues from Contracts with Customers (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Revenues from Contracts with Customers (Textual) | ||
Deferred revenue liability | $ 60,023,972 | $ 51,529,795 |
Deferred revenue of deposits received from customers | 0 | |
Deferred revenue | $ 17,587,688 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
US statutory income tax rate | 21.00% | 21.00% |
Valuation allowance recognized with respect to the loss in the US company | (21.00%) | (21.00%) |
China statutory income tax rate | 25.00% | 25.00% |
Effects of income tax exemptions and reliefs | (10.00%) | (10.00%) |
Effects of additional deduction allowed for R&D expenses | (3.96%) | (3.43%) |
Effects of expenses not deductible for tax purposes | 1.70% | 2.18% |
Other items | (0.82%) | 0.81% |
Effective tax rate | 11.92% | 14.56% |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Current | $ 2,659,828 | $ 2,201,850 | ||
Deferred | (461,097) | 642,343 | ||
Total | $ 329,964 | $ 1,238,752 | $ 2,198,731 | $ 2,844,193 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes (Textual) | |||||
High-Tech enterprise income tax rate | 15.00% | 15.00% | 15.00% | 15.00% | |
Federal corporate income tax rate | 21.00% | ||||
Recognized related interest and penalty amount | $ 587,821 | ||||
Recognized additional interest and penalty | $ 107,415 | ||||
Company recognized a one-time transition tax | $ 11,022,985 | ||||
Taxes payable as current liability | 2,528,913 | ||||
Installment payment | $ 881,839 |
Operating Lease with Related _2
Operating Lease with Related Party (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | |
Leases, Operating [Abstract] | |||
Operating lease right of use assets | [1] | $ 1,070,693 | |
Operating lease liabilities, current | [2] | 488,687 | |
Operating lease liabilities, non-current | 714,307 | ||
Total operating lease liabilities | $ 1,202,994 | ||
[1] | Operating lease right of use assets are recorded in other assets, non-current in the accompanying consolidated balance sheets. | ||
[2] | The current portion of operating lease liabilities is recorded in other current liabilities in the accompanying consolidated balance sheets. |
Operating Lease with Related _3
Operating Lease with Related Party (Details 1) | Jun. 30, 2019 |
Leases, Operating [Abstract] | |
Weighted-average remaining lease term | 3 years |
Weighted-average discount rate | 5.24% |
Operating Lease with Related _4
Operating Lease with Related Party (Details 2) | Jun. 30, 2019USD ($) |
Leases, Operating [Abstract] | |
2019 (remaining) | $ 384,259 |
2020 | 305,468 |
2021 | 305,468 |
2022 | 305,468 |
2023 and thereafter | |
Total lease payment | 1,300,663 |
Less imputed interest | (97,669) |
Total lease liabilities | $ 1,202,994 |
Operating Lease with Related _5
Operating Lease with Related Party (Details Textual) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2006 | Jan. 31, 2019 | ||
Operating Leased Assets [Line Items] | ||||
Operating lease costs | $ 288,113 | |||
Operating lease right of use assets | [1] | 1,070,693 | ||
Operating lease liabilities | $ 689,299 | $ 1,600,000 | ||
Building [Member] | Ruian [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Annual lease expense | $ 305,980 | |||
Building [Member] | Ruian [Member] | RMB [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Annual lease expense | $ 2,100,000 | |||
[1] | Operating lease right of use assets are recorded in other assets, non-current in the accompanying consolidated balance sheets. |
Warranty Claims (Details)
Warranty Claims (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Warranty Claims [Abstract] | |
Beginning balance at January 1, 2019 | $ 7,063,122 |
Aggregate increase for new warranties issued during current period | 2,044,227 |
Aggregate reduction for payments made and effect of exchange rate fluctuation | 2,108,907 |
Ending balance at June 30, 2019 | $ 6,998,442 |
Warranty Claims (Details Textua
Warranty Claims (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Warranty Claims [Abstract] | ||
Warranty claims are included in selling and distribution expenses | $ 7,063,122 | $ 1,828,168 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Mar. 31, 2018 | |
NET SALES TO EXTERNAL CUSTOMERS | ||||||
Net sales | $ 139,373,482 | $ 128,504,952 | $ 275,593,406 | $ 236,231,634 | ||
INTERSEGMENT SALES | ||||||
Intersegment sales | ||||||
GROSS PROFIT | ||||||
Gross profit | 36,269,362 | 34,430,270 | 72,789,932 | 64,629,756 | ||
Selling and distribution expenses | 16,463,830 | 13,956,009 | 29,348,397 | 23,993,870 | ||
General and administrative expenses | 9,221,426 | 7,694,411 | 16,596,319 | 12,468,189 | ||
Research and development expenses | 6,981,251 | 5,331,956 | 11,932,787 | 8,922,358 | ||
Other operating income, net | 2,495,568 | 2,379,227 | 4,958,170 | 4,576,551 | ||
Income from operations | 6,098,423 | 9,827,121 | 19,870,599 | 23,821,890 | ||
Interest income | 1,479,841 | 811,580 | 3,216,616 | 2,299,844 | ||
Government grants | 1,707,433 | 609,592 | 3,499,845 | 743,525 | ||
Other income | 40,349 | 175,627 | 95,029 | 202,693 | ||
Interest expenses | (3,173,047) | (3,529,416) | (7,145,545) | (6,883,127) | ||
Exchange differences | (537,875) | (1,091,208) | 523,130 | (489,922) | ||
Other expenses | (90,772) | (254,271) | (568,691) | (1,145,085) | ||
Income before income tax expense | 6,600,102 | $ 8,731,441 | 18,444,723 | 19,529,662 | ||
CAPITAL EXPENDITURE | ||||||
Total | 27,478,369 | 33,712,960 | ||||
DEPRECIATION AND AMORTIZATION | ||||||
Total | 6,927,367 | 5,832,558 | ||||
TOTAL ASSETS | ||||||
Total assets | 773,073,031 | 773,073,031 | $ 794,371,526 | |||
LONG LIVED ASSETS | ||||||
Long lived assets | 197,510,805 | 197,510,805 | 126,291,757 | |||
Commercial vehicles brake systems [Member] | ||||||
NET SALES TO EXTERNAL CUSTOMERS | ||||||
Net sales | 224,606,242 | 187,578,450 | ||||
INTERSEGMENT SALES | ||||||
Intersegment sales | ||||||
GROSS PROFIT | ||||||
Gross profit | 57,680,410 | 42,734,721 | ||||
CAPITAL EXPENDITURE | ||||||
Total | 22,914,212 | 27,215,974 | ||||
DEPRECIATION AND AMORTIZATION | ||||||
Total | 5,776,731 | 4,650,734 | ||||
TOTAL ASSETS | ||||||
Total assets | 644,665,601 | 644,665,601 | 492,348,129 | |||
LONG LIVED ASSETS | ||||||
Long lived assets | 164,704,260 | 164,704,260 | 106,779,681 | |||
Passenger vehicles auto parts [Member] | ||||||
NET SALES TO EXTERNAL CUSTOMERS | ||||||
Net sales | 50,987,164 | 48,653,184 | ||||
INTERSEGMENT SALES | ||||||
Intersegment sales | ||||||
GROSS PROFIT | ||||||
Gross profit | 15,109,522 | 21,895,035 | ||||
CAPITAL EXPENDITURE | ||||||
Total | 4,564,157 | 6,496,986 | ||||
DEPRECIATION AND AMORTIZATION | ||||||
Total | 1,150,636 | $ 1,181,824 | ||||
TOTAL ASSETS | ||||||
Total assets | 128,407,430 | 128,407,430 | 89,967,813 | |||
LONG LIVED ASSETS | ||||||
Long lived assets | $ 32,806,545 | $ 32,806,545 | $ 19,512,076 | $ 19,512,076 |
Contingencies (Details)
Contingencies (Details) | Jun. 30, 2019USD ($) |
Development Zone Facility [Member] | |
Relevant tax amount reserved | $ 2,300,205 |
Tax rate, land use right | 3.00% |
Development Zone Facility [Member] | Commercial Vehicles Brake Systems [Member] [Default Label] | |
Relevant tax amount reserved | $ 15,030,000 |
Dongshan Facility [Member] | |
Relevant tax amount reserved | $ 745,220 |
Tax rate, land use right | 3.00% |
Dongshan Facility [Member] | Commercial Vehicles Brake Systems [Member] [Default Label] | |
Relevant tax amount reserved | $ 4,560,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | 1 Months Ended |
Jul. 31, 2019USD ($) | |
China Construction Bank [Member] | |
Subsequent event, description | The Company obtained a short term loan in an amount of approximately $4.4 million from China Construction Bank. Interest rate was 4.35% per annum. The maturity date of this loan existing as of the filing date is July 23, 2020. The Company pledged its property to obtain this loan from China Construction Bank. |
Repaid loan principals and interest expenses | $ 7,100,000 |
COSCO Shipping Leasing Co., Ltd [Member] | |
Subsequent event, description | The Company entered into three loan agreements with COSCO Shipping Leasing Co., Ltd. ("COSCO") for a term of 36 months each. The total long term obligations under the three agreements amounted to RMB 180,000,000 (approximately $26.2 million). Total proceeds under these loan agreements totaled $21.8 million in the form of bank acceptance notes. |