Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 16, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Cleantech Solutions International, Inc., | |
Entity Central Index Key | 819,926 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 4,403,986 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 18,948,981 | $ 18,790,370 |
Restricted cash | 255,897 | 647,080 |
Notes receivable | 119,031 | 132,497 |
Accounts receivable, net of allowance for doubtful accounts | 16,192,325 | 15,823,859 |
Inventories, net of reserve for obsolete inventories | 2,068,206 | 1,827,084 |
Advances to suppliers | 1,080,998 | 1,038,884 |
Deferred tax assets | 222,362 | 220,895 |
Prepaid expenses and other | 1,135,994 | 992,055 |
Total Current Assets | 40,023,794 | 39,472,724 |
PROPERTY AND EQUIPMENT, net | 50,408,449 | 51,753,964 |
OTHER ASSETS: | ||
Land use rights, net | 3,381,601 | 3,382,071 |
Total Assets | 93,813,844 | 94,608,759 |
CURRENT LIABILITIES: | ||
Short-term bank loans | 3,024,240 | 3,081,332 |
Bank acceptance notes payable | 245,041 | 647,080 |
Accounts payable | 3,380,071 | 3,489,815 |
Accrued expenses | 5,814,769 | 6,361,079 |
Advances from customers | 697,789 | 433,050 |
VAT and service taxes payable | 94,297 | 269,284 |
Income taxes payable | 206,050 | 259,987 |
Total Current Liabilities | 13,462,257 | 14,541,627 |
Total Liabilities | $ 13,462,257 | $ 14,541,627 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock ($0.001 par value; 10,000,000 shares authorized; 0 share issued and outstanding at March 31, 2016 and December 31, 2015) | ||
Common stock ($0.001 par value; 50,000,000 shares authorized; 4,403,986 and 3,943,986 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively) | $ 4,404 | $ 3,944 |
Additional paid-in capital | 34,405,473 | 33,803,333 |
Retained earnings | 36,163,683 | 37,007,776 |
Statutory reserve | 3,555,468 | 3,555,468 |
Accumulated other comprehensive income - foreign currency translation adjustment | 6,222,559 | 5,696,611 |
Total Stockholders' Equity | 80,351,587 | 80,067,132 |
Total Liabilities and Stockholders' Equity | $ 93,813,844 | $ 94,608,759 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Balance Sheets [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 4,403,986 | 3,943,986 |
Common stock, shares outstanding | 4,403,986 | 3,943,986 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
REVENUES | $ 4,919,491 | $ 15,646,465 |
COST OF REVENUES | 4,706,611 | 12,574,433 |
GROSS PROFIT | 212,880 | 3,072,032 |
OPERATING EXPENSES: | ||
Depreciation | 160,738 | 344,696 |
Selling, general and administrative | 711,378 | 874,545 |
Research and development | 18,401 | 28,698 |
Total Operating Expenses | 890,517 | 1,247,939 |
(LOSS) INCOME FROM OPERATIONS | (677,637) | 1,824,093 |
OTHER INCOME (EXPENSE): | ||
Interest income | 11,962 | 5,833 |
Interest expense | (55,714) | (57,343) |
Foreign currency transaction gain (loss) | 114 | (11) |
Total Other Expense, net | (43,638) | (51,521) |
(LOSS) INCOME BEFORE INCOME TAXES | (721,275) | 1,772,572 |
INCOME TAXES | 122,818 | 530,138 |
NET (LOSS) INCOME | (844,093) | 1,242,434 |
COMPREHENSIVE (LOSS) INCOME: | ||
NET (LOSS) INCOME | (844,093) | 1,242,434 |
OTHER COMPREHENSIVE INCOME: | ||
Unrealized foreign currency translation gain | 525,948 | 472,980 |
COMPREHENSIVE (LOSS) INCOME | $ (318,145) | $ 1,715,414 |
NET (LOSS) INCOME PER COMMON SHARE: | ||
Basic | $ (0.21) | $ 0.32 |
Diluted | $ (0.21) | $ 0.32 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic | 4,100,689 | 3,934,653 |
Diluted | 4,100,689 | 3,934,653 |
Unaudited Consolidated Stateme5
Unaudited Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) income | $ (844,093) | $ 1,242,434 |
Adjustments to reconcile net (loss) income from operations to net cash provided by operating activities: | ||
Depreciation | 1,674,728 | 2,074,507 |
Amortization of land use rights | 22,599 | 24,086 |
Stock-based compensation and fees | 428,250 | 274,400 |
Changes in operating assets and liabilities: | ||
Notes receivable | 14,145 | 2,054 |
Accounts receivable | (259,741) | 2,330,169 |
Inventories | (225,787) | (939,030) |
Prepaid and other current assets | (26,969) | (4,835) |
Advances to suppliers | (34,725) | (31,318) |
Accounts payable | (131,047) | 873,118 |
Accrued expenses | (516,730) | (515,767) |
VAT and service taxes payable | (174,300) | (242,190) |
Income taxes payable | (54,883) | (360,739) |
Advances from customers | 258,198 | 322,533 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 129,645 | 5,049,422 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (9,332) | (4,755) |
NET CASH USED IN INVESTING ACTIVITIES | (9,332) | (4,755) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from bank loans | 1,529,176 | 2,200,202 |
Repayments of bank loans | (1,605,635) | (2,281,691) |
Decrease in restricted cash | 389,940 | 81,489 |
Decrease in bank acceptance notes payable | (400,644) | (81,489) |
NET CASH USED IN FINANCING ACTIVITIES | (87,163) | (81,489) |
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS | 125,461 | 56,931 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 158,611 | 5,020,109 |
CASH AND CASH EQUIVALENTS - beginning of period | 18,790,370 | 7,835,791 |
CASH AND CASH EQUIVALENTS - end of period | 18,948,981 | 12,855,900 |
Cash paid for: | ||
Interest | 55,714 | 57,343 |
Income taxes | 177,701 | $ 890,876 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Stock issued for future services | 110,350 | |
Stock issued for accrued liabilities | $ 64,000 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Cleantech Solutions International, Inc. (the “Company”) was incorporated in Delaware on June 24, 1987 under the name of Malex, Inc. On December 18, 2007, the Company’s corporate name was changed to China Wind Systems, Inc., and on June 13, 2011, the Company’s corporate name was changed to Cleantech Solutions International, Inc. On August 7, 2012, the Company was converted into a Nevada corporation. Through its affiliated companies and subsidiaries, the Company manufactures and sells textile dyeing and finishing machines and sells forged products and fabricated products to a range of clean technology customers including high precision forged rolled rings and related components for the wind power industry and other industries. The Company is the sole owner of Fulland Limited (“Fulland”), a Cayman Island limited liability company, which was organized on May 9, 2007. Fulland owns 100% of the capital stock of Green Power Environment Technology (Shanghai) Co., Ltd. (“Green Power”) and Wuxi Fulland Wind Energy Equipment Co., Ltd. (“Fulland Wind Energy”), which are wholly foreign-owned enterprises (“WFOE”) organized under the laws of the People’s Republic of China (“PRC” or “China”). Green Power is a party to a series of contractual arrangements, as fully described below, dated October 12, 2007 with Wuxi Huayang Heavy Industries, Co., Ltd. (“Heavy Industries”), formerly known as Wuxi Huayang Electrical Power Equipment Co., Ltd., and Wuxi Huayang Dyeing Machinery Co., Ltd. (“Dyeing”), both of which are limited liability companies organized under the laws of, and based in, the PRC. Heavy Industries and Dyeing are sometimes collectively referred to as the “Huayang Companies”. Fulland was organized by the owners of the Huayang Companies as a special purpose vehicle for purposes of raising capital, in accordance with requirements of the PRC State Administration of Foreign Exchange (“SAFE”). On May 31, 2007, SAFE issued an official notice known as Hui Zong Fa [2007] No. 106 (“Circular 106”), which requires the owners of any Chinese company to obtain SAFE’s approval before establishing any offshore holding company structure for foreign financing as well as subsequent acquisition matters in China. Accordingly, the owners of the Huayang Companies, Mr. Jianhua Wu and Ms. Lihua Tang, submitted their application to SAFE in early September 2007. On October 11, 2007, SAFE approved their application, permitting these Chinese citizens to establish Fulland as a special purpose vehicle for any foreign ownership and capital raising activities by the Huayang Companies. Dyeing, which was formed on August 17, 1995, produces and sells a variety of high and low temperature dyeing and finishing machinery for the textile industry. The Company refers to this segment as the dyeing and finishing equipment segment. Fulland Wind Energy was formed on August 27, 2008. In 2009, the Company began to produce and sell forged products through Fulland Wind Energy. Through Fulland Wind Energy, the Company manufactures and machines all forged products, including wind products such as shafts, rolled rings, gear rims, gearboxes, bearings and other components and finished products and assemblies for the wind power and other industries, including large-scale equipment used in the manufacturing process for the various industries. The Company refers to this segment of its business as the forged rolled rings and related components segment. Beginning in February 2015, Heavy Industries began to produce equipment for the petroleum and chemical industries, and it produces and sells a variety heat exchangers, separators, tanks, towers, cryogenic equipment, and other products. The Company refers to this new segment of its business as the petroleum and chemical equipment segment. Basis of presentation; management’s responsibility for preparation of financial statements The Company’s unaudited consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Fulland, Green Power and Fulland Wind Energy, as well as the financial statements of Huayang Companies - Dyeing and Heavy Industries. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2015 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2016. The consolidated balance sheet as of December 31, 2015 contained herein has been derived from the audited consolidated financial statements as of December 31, 2015, but does not include all disclosures required by the U.S. GAAP. Pursuant to Accounting Standards Codification (“ASC”) Topic 810, the Huayang Companies are considered variable interest entities (“VIE”), and the Company is the primary beneficiary. The Company’s relationships with the Huayang Companies and their shareholders are governed by a series of contractual arrangements between Green Power, the Company’s wholly foreign-owned enterprise in the PRC, and each of the Huayang Companies, which are the operating companies of the Company in the PRC. Under PRC laws, each of Green Power, Dyeing and Heavy Industries is an independent legal entity and none of them is exposed to liabilities incurred by the other parties. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC. On October 12, 2007, the Company entered into the following contractual arrangements with each of Dyeing and Heavy Industries: Consulting Services Agreement Operating Agreement Equity Pledge Agreement . Option Agreement . Pursuant to ASC Topic 810 and related subtopics related to the consolidation of variable interest entities, the accounts of the Huayang Companies are consolidated in the accompanying financial statements. As VIEs, the Huayang Companies’ sales are included in the Company’s total sales, its (loss) income from operations is consolidated with the Company’s, and the Company’s net (loss) income includes all of the Huayang Companies net (loss) income. The Company does not have any non-controlling interest and, accordingly, did not subtract any net (loss) income in calculating the net (loss) income of the VIEs that is attributable to the Company. Because of the contractual arrangements, the Company has a pecuniary interest in the Huayang Companies that requires consolidation of the Company’s and the Huayang Companies’ financial statements. Use of estimates The preparation of the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in the three months ended March 31, 2016 and 2015 include the allowance for doubtful accounts, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, accruals for taxes due, and the value of stock-based compensation. Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains with various financial institutions mainly in the PRC and the U.S. At March 31, 2016 and December 31, 2015, cash balances in banks in the PRC of $18,940,486 and $18,777,228, respectively, are uninsured. Fair value of financial instruments and other assets The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, notes receivable, accounts receivable, inventories, advances to suppliers, deferred tax assets, prepaid expenses and other, short-term bank loans, bank acceptance notes payable, accounts payable, accrued expenses, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments. ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. Concentrations of credit risk The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. At March 31, 2016 and December 31, 2015, the Company’s cash balances by geographic area were as follows: Country: March 31, 2016 December 31, 2015 United States $ 8,495 0.04 % $ 13,142 0.1 % China 18,940,486 99.96 % 18,777,228 99.9 % Total cash and cash equivalents $ 18,948,981 100.0 % $ 18,790,370 100.0 % Restricted cash Restricted cash consists of cash deposits held by various banks to secure bank acceptance notes payable. Notes receivable Notes receivable represents trade accounts receivable due from customers where the customers’ bank has guaranteed the payment of the receivable. This amount is non-interest bearing and is normally paid within six months. Historically, the Company has experienced no losses on notes receivable. The Company’s notes receivable totaled $119,031 and $132,497 at March 31, 2016 and December 31, 2015, respectively. Accounts receivable Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At March 31, 2016 and December 31, 2015, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $3,239,956 and $3,218,592, respectively. Inventories Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. A reserve is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. These reserves are recorded based on estimates. The Company recorded an inventory reserve of $1,100,583 and $1,093,326 at March 31, 2016 and December 31, 2015, respectively. Advance to suppliers Advances to suppliers represent the cash paid in advance for the purchase of raw material from suppliers. The advance payments are intended to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $1,080,998 and $1,038,884 at March 31, 2016 and December 31, 2015, respectively. Property and equipment Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the statements of operations and comprehensive (loss) income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Included in property and equipment is construction-in-progress which consisted of factory improvements and machinery pending installation and includes the costs of construction, machinery and equipment, and any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for their intended use. Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Advances from customers Advances from customers at March 31, 2016 and December 31, 2015 amounted to $697,789 and $433,050, respectively, and consist of prepayments from customers for merchandise that had not yet been shipped. The Company will recognize the deposits as revenue as customers take delivery of the goods and title to the assets is transferred to customers in accordance with the Company’s revenue recognition policy. Revenue recognition Pursuant to the guidance of ASC Topic 605 and ASC Topic 360, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the purchase price is fixed or determinable and collectability is reasonably assured. The Company recognizes revenues from the sale of dyeing and finishing equipment, forged rolled rings and other components, petroleum and chemical equipment upon shipment and transfer of title. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Warranty revenue is valued based on estimated service person hours to complete a service and generally is recognized over the contract period. For the three months ended March 31, 2016 and 2015, amounts allocated to installation and warranty revenues were $16,763 and $22,766, respectively. Based on historical experience, warranty service calls and any related labor costs have been minimal. All other product sales with customer specific acceptance provisions, including the forged rolled rings, are recognized upon customer acceptance and the delivery of the parts or service. Revenues related to spare part sales are recognized upon shipment or delivery based on the trade terms. Income taxes The Company is governed by the Income Tax Law of the PRC and the U.S. Internal Revenue Code of 1986, as amended. The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of March 31, 2016 and December 31, 2015, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future. Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date. Shipping costs Shipping costs are included in selling expenses and totaled $34,476 and $252,652 for the three months ended March 31, 2016 and 2015, respectively. Employee benefits The Company’s operations and employees are all located in the PRC. The Company makes mandatory contributions to the PRC government’s health, retirement benefit and unemployment funds in accordance with the relevant Chinese social security laws. The costs of these payments are charged to the same accounts as the related salary costs in the same period as the related salary costs incurred. Employee benefit costs totaled $47,751 and $68,452 for the three months ended March 31, 2016 and 2015, respectively. Advertising Advertising is expensed as incurred and is included in selling, general and administrative expenses. The Company did not incur any advertising expense during the three months ended March 31, 2016 and 2015. Research and development Research and development costs are expensed as incurred. The costs primarily consist of raw materials and salaries incurred for the development and improvement of the Company’s new dyeing machinery. Research and development costs totaled $18,401 and $28,698 for the three months ended March 31, 2016 and 2015, respectively. Foreign currency translation The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries and affiliates, whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income (loss). The cumulative translation adjustment and effect of exchange rate changes on cash for the three months ended March 31, 2016 and 2015 was $125,461 and $56,931, respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any 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. All of the Company’s revenue transactions are transacted in the functional currency of the operating subsidiaries and affiliates. Other than for the purchase of equipment from non-Chinese suppliers, the Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company. Asset and liability accounts at March 31, 2016 and December 31, 2015 were translated at 6.4479 RMB to $1.00 and at 6.4907 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of operations for the three months ended March 31, 2016 and 2015 were 6.53947 RMB and 6.1358 RMB to $1.00, respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. (Loss) income per share of common stock ASC Topic 260 “Earnings per Share,” requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net (loss) income per share is computed by dividing net (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net (loss) income per share is computed by dividing net (loss) income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company did not have any common stock equivalents and potentially dilutive common stock outstanding during the three months ended March 31, 2016 and 2015. The following table presents a reconciliation of basic and diluted net (loss) income per share: Three Months Ended 2016 2015 Net (loss) income for basic and diluted net (loss) income per share of common stock $ (844,093 ) $ 1,242,434 Weighted average common stock outstanding - basic and diluted 4,100,689 3,934,653 Net (loss) income per common share - basic and diluted $ (0.21 ) $ 0.32 Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of the goods or services exchanged. Comprehensive (loss) income Comprehensive (loss) income is comprised of net (loss) income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive (loss) income for the three months ended March 31, 2016 and 2015 included net (loss) income and unrealized gain from foreign currency translation adjustments. Recent accounting pronouncements In March 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)”. Under ASU 2016-09, all excess tax benefits and deficiencies arising from employee share-based payment awards, and dividends on those awards, will be recognized in the income statement during the period in which they occur. ASU 2016-09 allows companies to make an accounting policy election to estimate forfeitures, as required today, or record them when they occur and allows companies to withhold an amount up to the maximum statutory tax rate without causing the award to be classified as a liability. Within the statement of cash flows, ASU 2016-09 requires excess tax benefits to be classified as an operating activity and cash payments to tax authorities in connection with shares withheld to be classified as a financing activity. ASU 2016-09 is effective for annual periods, and interim periods within the annual periods, beginning after December 15, 2016. Early adoption is permitted. The Company has not yet determined the effect that ASU 2016-09 will have on its financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Mar. 31, 2016 | |
Accounts Receivable and Restricted Net Assets [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 2 – ACCOUNTS RECEIVABLE At March 31, 2016 and December 31, 2015, accounts receivable consisted of the following: March 31, 2016 December 31, 2015 Accounts receivable $ 19,432,281 $ 19,042,451 Less: allowance for doubtful accounts (3,239,956 ) (3,218,592 ) $ 16,192,325 $ 15,823,859 The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. The Company did not change the allowance for doubtful accounts for the three months ended March 31, 2016 and 2015. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2016 | |
Inventories [Abstract] | |
INVENTORIES | NOTE 3 – INVENTORIES At March 31, 2016 and December 31, 2015, inventories consisted of the following: March 31, 2016 December 31, 2015 Raw materials $ 957,577 $ 690,824 Work-in-process 820,154 1,593,815 Finished goods 1,391,058 635,771 3,168,789 2,920,410 Less: reserve for obsolete inventories (1,100,583 ) (1,093,326 ) $ 2,068,206 $ 1,827,084 The Company establishes a reserve to mark down its inventories for estimated unmarketable inventories equal to the difference between the cost of inventories and the estimated net realizable value based on assumptions about the usability of the inventories, future demand and market conditions. For the three months ended March 31, 2016 and 2015, the Company did not make any change for reserve for obsolete inventories. |
Prepaid Expenses and Other
Prepaid Expenses and Other | 3 Months Ended |
Mar. 31, 2016 | |
Prepaid Expenses and Other [Abstract] | |
PREPAID EXPENSES AND OTHER | NOTE 4 – PREPAID EXPENSES AND OTHER At March 31, 2016 and December 31, 2015, prepaid expenses and other consisted of the following: March 31, 2016 December 31, 2015 Prepaid income taxes $ 790,685 $ 785,471 Prepaid stock-based professional fees 110,350 - Prepaid valued added tax on purchase 89,327 89,353 Other 145,632 117,231 $ 1,135,994 $ 992,055 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT At March 31, 2016 and December 31, 2015, property and equipment consisted of the following: Useful life March 31, 2016 December 31, 2015 Manufacturing equipment 5 - 10 years $ 66,831,485 $ 66,381,394 Building and building improvements 5 - 20 years 24,832,012 24,668,268 Vehicles 5 years 195,843 194,552 Office equipment and furniture 5 years 166,501 165,403 92,025,841 91,409,617 Less: accumulated depreciation (41,617,392 ) (39,655,653 ) $ 50,408,449 $ 51,753,964 For the three months ended March 31, 2016 and 2015, depreciation expense amounted to $1,674,728 and $2,074,507, respectively, of which $1,513,990 and $1,729,811, respectively, was included in cost of revenues, and the remainder was included in operating expenses. |
Land Use Rights
Land Use Rights | 3 Months Ended |
Mar. 31, 2016 | |
Land Use Rights [Abstract] | |
LAND USE RIGHTS | NOTE 6 – LAND USE RIGHTS There is no private ownership of land in China. Land is owned by the government and the government grants land use rights for specified terms. The Company’s land use rights have terms of 45 and 50 years and expire on January 1, 2053 and October 30, 2053. The Company amortizes the land use rights over the term of the respective land use right. For the three months ended March 31, 2016 and 2015, amortization of land use rights amounted to $22,599 and $24,086, respectively. At March 31, 2016 and December 31, 2015, land use rights consisted of the following: Useful life March 31, 2016 December 31, 2015 Land use rights 45 - 50 years $ 4,187,533 $ 4,159,920 Less: accumulated amortization (805,932 ) (777,849 ) $ 3,381,601 $ 3,382,071 Amortization of land use rights attributable to future periods is as follows: Twelve-month periods ending March 31: Amount 2017 $ 91,679 2018 91,679 2019 91,679 2020 91,679 2021 91,679 Thereafter 2,923,206 $ 3,381,601 |
Short-Term Bank Loans
Short-Term Bank Loans | 3 Months Ended |
Mar. 31, 2016 | |
Short-Term Bank Loans [Abstract] | |
SHORT-TERM BANK LOANS | NOTE 7 – SHORT-TERM BANK LOANS Short-term bank loans represent amounts due to various banks that are due within one year. These loans can be renewed with these banks upon maturity. At March 31, 2016 and December 31, 2015, short-term bank loans consisted of the following: March 31, December 31, 2015 Loan from Agricultural and Commercial Bank, due on June 16, 2016 with annual interest rate of 7.038% at March 31, 2016 and December 31, 2015, secured by certain assets of the Company $ 697,902 $ 693,300 Loan from Jiangsu Huishan Mintai Village Town Bank, due on March 1, 2016 with annual interest rate of 10.56% at December 31, 2015, secured by certain assets of the Company and repaid in February 2016 - 770,333 Loan from Jiangsu Huishan Mintai Village Town Bank, due on November 1, 2016 with annual interest rate of 10.56% at March 31, 2016, secured by certain assets of the Company 775,446 - Loan from Bank of Communications, due on September 3, 2016 with annual interest rate of 5.62% at March 31, 2016 and December 31, 2015 775,446 770,333 Loan from Bank of China, due on January 12, 2016 with annual interest rate of 7.20% at December 31, 2015, secured by certain assets of the Company and repaid in January 2016 - 385,166 Loan from Bank of China, due on December 26, 2016 with annual interest rate of 5.97% at March 31, 2016, secured by certain assets of the Company 775,446 - Loan from Bank of China, due on January 25, 2016 with annual interest rate of 7.20% at December 31, 2015, secured by certain assets of the Company and repaid in January 2016 - 462,200 Total short-term bank loans $ 3,024,240 $ 3,081,332 For the three months ended March 31, 2016 and 2015, interest expense related to short-term bank loans amounted to $55,714 and $57,343, respectively, which were included in interest expense on the accompanying consolidated statements of operations and comprehensive (loss) income. |
Bank Acceptance Notes Payable
Bank Acceptance Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
Bank Acceptance Notes Payable [Abstract] | |
BANK ACCEPTANCE NOTES PAYABLE | NOTE 8 – BANK ACCEPTANCE NOTES PAYABLE Bank acceptance notes payable represent amounts due to banks which are collateralized. All bank acceptance notes payable are secured by the Company’s restricted cash which are deposits with various lenders. At March 31, 2016 and December 31, 2015, the Company’s bank acceptance notes payables consisted of the following: March 31, 2016 December 31, 2015 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on January 9, 2016, collateralized by 100% of restricted cash deposited $ - $ 308,133 Bank of China, non-interest bearing, due and paid on January 16, 2016, collateralized by 100% of restricted cash deposited - 107,847 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on March 21, 2016, collateralized by 100% of restricted cash deposited - 77,033 Bank of China, non-interest bearing, due and paid on March 23, 2016, collateralized by 100% of restricted cash deposited - 77,033 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on June 29, 2016, collateralized by 100% of restricted cash deposited 77,545 77,034 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on August 29, 2016, collateralized by 100% of restricted cash deposited 77,544 - Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on September 25, 2016, collateralized by 100% of restricted cash deposited 31,018 - Agricultural and Commercial Bank, non-interest bearing, due on September 10, 2016, collateralized by restricted cash deposited of $69,790 58,934 - Total $ 245,041 $ 647,080 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2016 | |
Accrued Expenses [Abstract] | |
ACCRUED EXPENSES | NOTE 9 – ACCRUED EXPENSES At March 31, 2016 and December 31, 2015, accrued expenses consisted of the following: March 31, 2016 December 31, 2015 Accrued liability for claimed sale contract dispute (1) $ 5,599,287 $ 5,562,365 Accrued salaries and related benefits 85,657 465,514 Accrued professional fees 36,517 171,433 Other payables 93,308 161,767 $ 5,814,769 $ 6,361,079 (1) In December 2015, the Company received a notice of contract termination in writing from its largest customer, which was a customer in the petroleum and chemical equipment segment, alleging breach of contract for late delivery of product and for delivery of product with quality defects. Pursuant to the sales contract, the customer demanded payment of a penalty of 20% of the contract price plus penalties for late delivery and damages in the amounts of 36,103,640 RMB ($5,599,287 and $5,562,365 at March 31, 2016 and December 31, 2015, respectively) which has been included in accrued expenses. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 10 – STOCKHOLDERS’ EQUITY Common stock issued for services On March 1, 2016, the Board of Directors approved and authorized the Company to issue 160,000 shares of common stock pursuant to its amended 2010 long-term incentive plan, including 75,000 shares to its former chief financial officer. The shares were valued at $209,600, the fair market value on the grant date using the reported closing share price on the date of grant, and the Company reduced accrued liabilities of $64,000 and recorded stock-based compensation and fees of $35,250 for the three months ended March 31, 2016 and recorded prepaid expenses of $110,350 which will be amortized over the rest of corresponding service periods. On March 1, 2016, the Board of Directors approved and authorized the Company to issue 300,000 shares of common stock to two companies which performed services relating to preparing and implementing a new business plan for the Company with the objective of improving the Company’s long-term growth. The shares were valued at fair market value using the reported closing share price on the dates of grant, and the Company recorded stock-based compensation of $393,000 in the first quarter of 2016. |
Statutory Reserve
Statutory Reserve | 3 Months Ended |
Mar. 31, 2016 | |
Statutory Reserve [Abstract] | |
STATUTORY RESERVE | NOTE 11 – STATUTORY RESERVE The Company is required to make appropriations to statutory reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital or members’ equity. As of December 31, 2015, the Company appropriated the required maximum 50% of its registered capital to statutory reserve for Dyeing and Heavy Industries; accordingly, no additional statutory reserve is required for the three months ended March 31, 2016. As of March 31, 2016, the Company had not appropriated the required maximum 50% of its registered capital to statutory reserve for Fulland Wind Energy. During the three months ended March 31, 2016, the Company did not make any appropriations to statutory reserve for Fulland Wind Energy as it incurred recurring net loss. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | NOTE 12 – SEGMENT INFORMATION For the three months ended March 31, 2016 and 2015, the Company operated in three reportable business segments - (1) the manufacture of textile dyeing and finishing equipment segment, (2) the manufacture of forged rolled rings and related components segment, and (3) the manufacture of petroleum and chemical equipment segment. The Company’s reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. All of the Company’s operations are conducted in the PRC. Information with respect to these reportable business segments for the three months ended March 31, 2016 and 2015 was as follows: Revenues 2016 2015 Dyeing and finishing equipment $ 4,526,700 $ 6,523,352 Forged rolled rings and related components 262,055 7,273,612 Petroleum and chemical equipment 130,736 1,849,501 4,919,491 15,646,465 Depreciation Dyeing and finishing equipment 955,279 862,084 Forged rolled rings and related components 662,555 698,441 Petroleum and chemical equipment 56,894 513,982 1,674,728 2,074,507 Interest expense Dyeing and finishing equipment 32,610 35,658 Forged rolled rings and related components 12,242 8,104 Petroleum and chemical equipment 10,862 13,581 55,714 57,343 Net income (loss) Dyeing and finishing equipment 368,455 748,216 Forged rolled rings and related components (698,078 ) 613,663 Petroleum and chemical equipment (42,436 ) 226,429 Other (a) (472,034 ) (345,874 ) $ (844,093 ) $ 1,242,434 Identifiable long-lived tangible assets at March 31, 2016 and December 31, 2015 by segment March 31, 2016 December 31, 2015 Dyeing and finishing equipment $ 25,146,775 $ 25,782,801 Forged rolled rings and related components 13,775,724 14,212,045 Petroleum and chemical equipment 11,485,950 11,759,118 $ 50,408,449 $ 51,753,964 Identifiable long-lived tangible assets at March 31, 2016 and December 31, 2015 by geographical location March 31, 2016 December 31, 2015 China $ 50,408,449 $ 51,753,964 United States - - $ 50,408,449 $ 51,753,964 (a) The Company does not allocate any general and administrative expense of its U.S. activities to its reportable segments, because these activities are managed at a corporate level. |
Concentration
Concentration | 3 Months Ended |
Mar. 31, 2016 | |
Concentration [Abstract] | |
CONCENTRATION | NOTE 13 – CONCENTRATION Customers The following table sets forth information as to each customer that accounted for 10% or more of the Company’s revenues for the three months ended March 31, 2016 and 2015. Three Months Ended Customer 2016 2015 A 18 % * B 16 % * C * 12 % D 12 % * E 11 % * * Less than 10%. The four largest customers accounted for 16.1% of the Company’s total outstanding accounts receivable at March 31, 2016. At December 31, 2015, the Company had a dispute with its largest customer and the accounts receivable from its largest customer was fully reserved. No customer accounted for 10% of the Company’s total outstanding accounts receivable at December 31, 2015. Suppliers The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s purchases for the three months ended March 31, 2016 and 2015. Three Months Ended Supplier 2016 2015 A 24 % 22 % B * 21 % C 16 % * * Less than 10%. The two largest suppliers accounted for 6.8% of the Company’s total outstanding accounts payable at March 31, 2016. Three largest suppliers accounted for 13.6% of the Company’s total outstanding accounts payable at December 31, 2015. |
Restricted Net Assets
Restricted Net Assets | 3 Months Ended |
Mar. 31, 2016 | |
Accounts Receivable and Restricted Net Assets [Abstract] | |
RESTRICTED NET ASSETS | NOTE 14 – RESTRICTED NET ASSETS Regulations in the PRC permit payments of dividends by the Company’s PRC VIEs only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Subject to certain cumulative limit, a statutory reserve fund requires annual appropriations of at least 10% of after-tax profit, if any, of the relevant PRC VIE’s and subsidiary. Heavy Industries and Dyeing had reached the cumulative limit as of December 31, 2015. The statutory reserve funds are not distributable as cash dividends. As a result of these PRC laws and regulations, the Company’s PRC VIE’s and its subsidiary are restricted in their abilities to transfer a portion of their net assets to the Company. Foreign exchange and other regulations in PRC may further restrict the Company’s PRC VIEs and its subsidiaries from transferring funds to the Company in the form of loans and/or advances. As of March 31, 2016 and December 31, 2015, substantially all of the Company’s net assets are attributable to the PRC VIE’s and its subsidiaries located in the PRC. Accordingly, the Company’s restricted net assets at March 31, 2016 and December 31, 2015 were approximately $79,781,000 and $79,627,000, respectively. |
Organization and Summary of S20
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |
Basis of presentation management's responsibility for preparation of financial statements | Basis of presentation; management’s responsibility for preparation of financial statements The Company’s unaudited consolidated financial statements include the financial statements of its wholly-owned subsidiaries, Fulland, Green Power and Fulland Wind Energy, as well as the financial statements of Huayang Companies - Dyeing and Heavy Industries. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2015 and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2016. The consolidated balance sheet as of December 31, 2015 contained herein has been derived from the audited consolidated financial statements as of December 31, 2015, but does not include all disclosures required by the U.S. GAAP. Pursuant to Accounting Standards Codification (“ASC”) Topic 810, the Huayang Companies are considered variable interest entities (“VIE”), and the Company is the primary beneficiary. The Company’s relationships with the Huayang Companies and their shareholders are governed by a series of contractual arrangements between Green Power, the Company’s wholly foreign-owned enterprise in the PRC, and each of the Huayang Companies, which are the operating companies of the Company in the PRC. Under PRC laws, each of Green Power, Dyeing and Heavy Industries is an independent legal entity and none of them is exposed to liabilities incurred by the other parties. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC. On October 12, 2007, the Company entered into the following contractual arrangements with each of Dyeing and Heavy Industries: Consulting Services Agreement Operating Agreement Equity Pledge Agreement . Option Agreement . Pursuant to ASC Topic 810 and related subtopics related to the consolidation of variable interest entities, the accounts of the Huayang Companies are consolidated in the accompanying financial statements. As VIEs, the Huayang Companies’ sales are included in the Company’s total sales, its (loss) income from operations is consolidated with the Company’s, and the Company’s net (loss) income includes all of the Huayang Companies net (loss) income. The Company does not have any non-controlling interest and, accordingly, did not subtract any net (loss) income in calculating the net (loss) income of the VIEs that is attributable to the Company. Because of the contractual arrangements, the Company has a pecuniary interest in the Huayang Companies that requires consolidation of the Company’s and the Huayang Companies’ financial statements. |
Use of estimates | Use of estimates The preparation of the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in the three months ended March 31, 2016 and 2015 include the allowance for doubtful accounts, the allowance for obsolete inventory, the useful life of property and equipment and intangible assets, assumptions used in assessing impairment of long-term assets and valuation of deferred tax assets, accruals for taxes due, and the value of stock-based compensation. |
Cash and cash equivalents | Cash and cash equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains with various financial institutions mainly in the PRC and the U.S. At March 31, 2016 and December 31, 2015, cash balances in banks in the PRC of $18,940,486 and $18,777,228, respectively, are uninsured. |
Fair value of financial instruments and other assets | Fair value of financial instruments and other assets The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, notes receivable, accounts receivable, inventories, advances to suppliers, deferred tax assets, prepaid expenses and other, short-term bank loans, bank acceptance notes payable, accounts payable, accrued expenses, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments. ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. |
Concentrations of credit risk | Concentrations of credit risk The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. At March 31, 2016 and December 31, 2015, the Company’s cash balances by geographic area were as follows: Country: March 31, 2016 December 31, 2015 United States $ 8,495 0.04 % $ 13,142 0.1 % China 18,940,486 99.96 % 18,777,228 99.9 % Total cash and cash equivalents $ 18,948,981 100.0 % $ 18,790,370 100.0 % |
Restricted cash | Restricted cash Restricted cash consists of cash deposits held by various banks to secure bank acceptance notes payable. |
Notes receivable | Notes receivable Notes receivable represents trade accounts receivable due from customers where the customers’ bank has guaranteed the payment of the receivable. This amount is non-interest bearing and is normally paid within six months. Historically, the Company has experienced no losses on notes receivable. The Company’s notes receivable totaled $119,031 and $132,497 at March 31, 2016 and December 31, 2015, respectively. |
Accounts receivable | Accounts receivable Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At March 31, 2016 and December 31, 2015, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amounts of $3,239,956 and $3,218,592, respectively. |
Inventories | Inventories Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. A reserve is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. These reserves are recorded based on estimates. The Company recorded an inventory reserve of $1,100,583 and $1,093,326 at March 31, 2016 and December 31, 2015, respectively. |
Advance to suppliers | Advance to suppliers Advances to suppliers represent the cash paid in advance for the purchase of raw material from suppliers. The advance payments are intended to ensure preferential pricing and delivery. The amounts advanced under such arrangements totaled $1,080,998 and $1,038,884 at March 31, 2016 and December 31, 2015, respectively. |
Property and equipment | Property and equipment Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the statements of operations and comprehensive (loss) income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Included in property and equipment is construction-in-progress which consisted of factory improvements and machinery pending installation and includes the costs of construction, machinery and equipment, and any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for their intended use. |
Impairment of long-lived assets | Impairment of long-lived assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. |
Advances from customers | Advances from customers Advances from customers at March 31, 2016 and December 31, 2015 amounted to $697,789 and $433,050, respectively, and consist of prepayments from customers for merchandise that had not yet been shipped. The Company will recognize the deposits as revenue as customers take delivery of the goods and title to the assets is transferred to customers in accordance with the Company’s revenue recognition policy. |
Revenue recognition | Revenue recognition Pursuant to the guidance of ASC Topic 605 and ASC Topic 360, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the purchase price is fixed or determinable and collectability is reasonably assured. The Company recognizes revenues from the sale of dyeing and finishing equipment, forged rolled rings and other components, petroleum and chemical equipment upon shipment and transfer of title. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Warranty revenue is valued based on estimated service person hours to complete a service and generally is recognized over the contract period. For the three months ended March 31, 2016 and 2015, amounts allocated to installation and warranty revenues were $16,763 and $22,766, respectively. Based on historical experience, warranty service calls and any related labor costs have been minimal. All other product sales with customer specific acceptance provisions, including the forged rolled rings, are recognized upon customer acceptance and the delivery of the parts or service. Revenues related to spare part sales are recognized upon shipment or delivery based on the trade terms. |
Income taxes | Income taxes The Company is governed by the Income Tax Law of the PRC and the U.S. Internal Revenue Code of 1986, as amended. The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of March 31, 2016 and December 31, 2015, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future. |
Stock-based compensation | Stock-based compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date. |
Shipping costs | Shipping costs Shipping costs are included in selling expenses and totaled $34,476 and $252,652 for the three months ended March 31, 2016 and 2015, respectively. |
Employee benefits | Employee benefits The Company’s operations and employees are all located in the PRC. The Company makes mandatory contributions to the PRC government’s health, retirement benefit and unemployment funds in accordance with the relevant Chinese social security laws. The costs of these payments are charged to the same accounts as the related salary costs in the same period as the related salary costs incurred. Employee benefit costs totaled $47,751 and $68,452 for the three months ended March 31, 2016 and 2015, respectively. |
Advertising | Advertising Advertising is expensed as incurred and is included in selling, general and administrative expenses. The Company did not incur any advertising expense during the three months ended March 31, 2016 and 2015. |
Research and development | Research and development Research and development costs are expensed as incurred. The costs primarily consist of raw materials and salaries incurred for the development and improvement of the Company’s new dyeing machinery. Research and development costs totaled $18,401 and $28,698 for the three months ended March 31, 2016 and 2015, respectively. |
Foreign currency translation | Foreign currency translation The reporting currency of the Company is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries and affiliates, whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income (loss). The cumulative translation adjustment and effect of exchange rate changes on cash for the three months ended March 31, 2016 and 2015 was $125,461 and $56,931, respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any 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. All of the Company’s revenue transactions are transacted in the functional currency of the operating subsidiaries and affiliates. Other than for the purchase of equipment from non-Chinese suppliers, the Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company. Asset and liability accounts at March 31, 2016 and December 31, 2015 were translated at 6.4479 RMB to $1.00 and at 6.4907 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of operations for the three months ended March 31, 2016 and 2015 were 6.53947 RMB and 6.1358 RMB to $1.00, respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. |
(Loss) income per share of common stock | (Loss) income per share of common stock ASC Topic 260 “Earnings per Share,” requires presentation of both basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net (loss) income per share is computed by dividing net (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net (loss) income per share is computed by dividing net (loss) income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company did not have any common stock equivalents and potentially dilutive common stock outstanding during the three months ended March 31, 2016 and 2015. The following table presents a reconciliation of basic and diluted net (loss) income per share: Three Months Ended 2016 2015 Net (loss) income for basic and diluted net (loss) income per share of common stock $ (844,093 ) $ 1,242,434 Weighted average common stock outstanding - basic and diluted 4,100,689 3,934,653 Net (loss) income per common share - basic and diluted $ (0.21 ) $ 0.32 |
Related parties | Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of the goods or services exchanged. |
Comprehensive (loss) income | Comprehensive (loss) income Comprehensive (loss) income is comprised of net (loss) income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive (loss) income for the three months ended March 31, 2016 and 2015 included net (loss) income and unrealized gain from foreign currency translation adjustments. |
Recent accounting pronouncements | Recent accounting pronouncements In March 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “Improvements to Employee Share-Based Payment Accounting (Topic 718)”. Under ASU 2016-09, all excess tax benefits and deficiencies arising from employee share-based payment awards, and dividends on those awards, will be recognized in the income statement during the period in which they occur. ASU 2016-09 allows companies to make an accounting policy election to estimate forfeitures, as required today, or record them when they occur and allows companies to withhold an amount up to the maximum statutory tax rate without causing the award to be classified as a liability. Within the statement of cash flows, ASU 2016-09 requires excess tax benefits to be classified as an operating activity and cash payments to tax authorities in connection with shares withheld to be classified as a financing activity. ASU 2016-09 is effective for annual periods, and interim periods within the annual periods, beginning after December 15, 2016. Early adoption is permitted. The Company has not yet determined the effect that ASU 2016-09 will have on its financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
Organization and Summary of S21
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |
Cash balances by geographic area | Country: March 31, 2016 December 31, 2015 United States $ 8,495 0.04 % $ 13,142 0.1 % China 18,940,486 99.96 % 18,777,228 99.9 % Total cash and cash equivalents $ 18,948,981 100.0 % $ 18,790,370 100.0 % |
Reconciliation of basic and diluted net income per share | Three Months Ended 2016 2015 Net (loss) income for basic and diluted net (loss) income per share of common stock $ (844,093 ) $ 1,242,434 Weighted average common stock outstanding - basic and diluted 4,100,689 3,934,653 Net (loss) income per common share - basic and diluted $ (0.21 ) $ 0.32 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounts Receivable and Restricted Net Assets [Abstract] | |
Components of accounts receivable | March 31, 2016 December 31, 2015 Accounts receivable $ 19,432,281 $ 19,042,451 Less: allowance for doubtful accounts (3,239,956 ) (3,218,592 ) $ 16,192,325 $ 15,823,859 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventories [Abstract] | |
Components of inventories | March 31, 2016 December 31, 2015 Raw materials $ 957,577 $ 690,824 Work-in-process 820,154 1,593,815 Finished goods 1,391,058 635,771 3,168,789 2,920,410 Less: reserve for obsolete inventories (1,100,583 ) (1,093,326 ) $ 2,068,206 $ 1,827,084 |
Prepaid Expenses and Other (Tab
Prepaid Expenses and Other (Table) | 3 Months Ended |
Mar. 31, 2016 | |
Prepaid Expenses and Other [Abstract] | |
Schedule of prepaid expenses and other | March 31, 2016 December 31, 2015 Prepaid income taxes $ 790,685 $ 785,471 Prepaid stock-based professional fees 110,350 - Prepaid valued added tax on purchase 89,327 89,353 Other 145,632 117,231 $ 1,135,994 $ 992,055 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property and Equipment [Abstract] | |
Components of property and equipment | Useful life March 31, 2016 December 31, 2015 Manufacturing equipment 5 - 10 years $ 66,831,485 $ 66,381,394 Building and building improvements 5 - 20 years 24,832,012 24,668,268 Vehicles 5 years 195,843 194,552 Office equipment and furniture 5 years 166,501 165,403 92,025,841 91,409,617 Less: accumulated depreciation (41,617,392 ) (39,655,653 ) $ 50,408,449 $ 51,753,964 |
Land Use Rights (Tables)
Land Use Rights (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Land Use Rights [Abstract] | |
Components of land use rights | Useful life March 31, 2016 December 31, 2015 Land use rights 45 - 50 years $ 4,187,533 $ 4,159,920 Less: accumulated amortization (805,932 ) (777,849 ) $ 3,381,601 $ 3,382,071 |
Amortization of land use rights attributable to future period | Twelve-month periods ending March 31: Amount 2017 $ 91,679 2018 91,679 2019 91,679 2020 91,679 2021 91,679 Thereafter 2,923,206 $ 3,381,601 |
Short-Term Bank Loans (Tables)
Short-Term Bank Loans (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Short-Term Bank Loans [Abstract] | |
Schedule of short-term bank loans | March 31, December 31, 2015 Loan from Agricultural and Commercial Bank, due on June 16, 2016 with annual interest rate of 7.038% at March 31, 2016 and December 31, 2015, secured by certain assets of the Company $ 697,902 $ 693,300 Loan from Jiangsu Huishan Mintai Village Town Bank, due on March 1, 2016 with annual interest rate of 10.56% at December 31, 2015, secured by certain assets of the Company and repaid in February 2016 - 770,333 Loan from Jiangsu Huishan Mintai Village Town Bank, due on November 1, 2016 with annual interest rate of 10.56% at March 31, 2016, secured by certain assets of the Company 775,446 - Loan from Bank of Communications, due on September 3, 2016 with annual interest rate of 5.62% at March 31, 2016 and December 31, 2015 775,446 770,333 Loan from Bank of China, due on January 12, 2016 with annual interest rate of 7.20% at December 31, 2015, secured by certain assets of the Company and repaid in January 2016 - 385,166 Loan from Bank of China, due on December 26, 2016 with annual interest rate of 5.97% at March 31, 2016, secured by certain assets of the Company 775,446 - Loan from Bank of China, due on January 25, 2016 with annual interest rate of 7.20% at December 31, 2015, secured by certain assets of the Company and repaid in January 2016 - 462,200 Total short-term bank loans $ 3,024,240 $ 3,081,332 |
Bank Acceptance Notes Payable (
Bank Acceptance Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Bank Acceptance Notes Payable [Abstract] | |
Schedule of bank acceptance notes payables | March 31, 2016 December 31, 2015 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on January 9, 2016, collateralized by 100% of restricted cash deposited $ - $ 308,133 Bank of China, non-interest bearing, due and paid on January 16, 2016, collateralized by 100% of restricted cash deposited - 107,847 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on March 21, 2016, collateralized by 100% of restricted cash deposited - 77,033 Bank of China, non-interest bearing, due and paid on March 23, 2016, collateralized by 100% of restricted cash deposited - 77,033 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on June 29, 2016, collateralized by 100% of restricted cash deposited 77,545 77,034 Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on August 29, 2016, collateralized by 100% of restricted cash deposited 77,544 - Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on September 25, 2016, collateralized by 100% of restricted cash deposited 31,018 - Agricultural and Commercial Bank, non-interest bearing, due on September 10, 2016, collateralized by restricted cash deposited of $69,790 58,934 - Total $ 245,041 $ 647,080 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accrued Expenses [Abstract] | |
Schedule of accrued epenses | March 31, 2016 December 31, 2015 Accrued liability for claimed sale contract dispute (1) $ 5,599,287 $ 5,562,365 Accrued salaries and related benefits 85,657 465,514 Accrued professional fees 36,517 171,433 Other payables 93,308 161,767 $ 5,814,769 $ 6,361,079 (1) In December 2015, the Company received a notice of contract termination in writing from its largest customer, which was a customer in the petroleum and chemical equipment segment, alleging breach of contract for late delivery of product and for delivery of product with quality defects. Pursuant to the sales contract, the customer demanded payment of a penalty of 20% of the contract price plus penalties for late delivery and damages in the amounts of 36,103,640 RMB ($5,599,287 and $5,562,365 at March 31, 2016 and December 31, 2015, respectively) which has been included in accrued expenses. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information [Abstract] | |
Segment Information | Revenues 2016 2015 Dyeing and finishing equipment $ 4,526,700 $ 6,523,352 Forged rolled rings and related components 262,055 7,273,612 Petroleum and chemical equipment 130,736 1,849,501 4,919,491 15,646,465 Depreciation Dyeing and finishing equipment 955,279 862,084 Forged rolled rings and related components 662,555 698,441 Petroleum and chemical equipment 56,894 513,982 1,674,728 2,074,507 Interest expense Dyeing and finishing equipment 32,610 35,658 Forged rolled rings and related components 12,242 8,104 Petroleum and chemical equipment 10,862 13,581 55,714 57,343 Net income (loss) Dyeing and finishing equipment 368,455 748,216 Forged rolled rings and related components (698,078 ) 613,663 Petroleum and chemical equipment (42,436 ) 226,429 Other (a) (472,034 ) (345,874 ) $ (844,093 ) $ 1,242,434 Identifiable long-lived tangible assets at March 31, 2016 and December 31, 2015 by segment March 31, 2016 December 31, 2015 Dyeing and finishing equipment $ 25,146,775 $ 25,782,801 Forged rolled rings and related components 13,775,724 14,212,045 Petroleum and chemical equipment 11,485,950 11,759,118 $ 50,408,449 $ 51,753,964 Identifiable long-lived tangible assets at March 31, 2016 and December 31, 2015 by geographical location March 31, 2016 December 31, 2015 China $ 50,408,449 $ 51,753,964 United States - - $ 50,408,449 $ 51,753,964 (a) The Company does not allocate any general and administrative expense of its U.S. activities to its reportable segments, because these activities are managed at a corporate level. |
Concentration (Tables)
Concentration (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Concentration [Abstract] | |
Concentration of revenue from customers | Three Months Ended Customer 2016 2015 A 18 % * B 16 % * C * 12 % D 12 % * E 11 % * * Less than 10%. |
Concentration of purchase from suppliers | Three Months Ended Supplier 2016 2015 A 24 % 22 % B * 21 % C 16 % * * Less than 10%. |
Organization and Summary of S32
Organization and Summary of Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Cash balances by geographic area | ||||
Total cash and cash equivalents | $ 18,948,981 | $ 18,790,370 | $ 12,855,900 | $ 7,835,791 |
Total cash and cash equivalents, percentage | 100.00% | 100.00% | ||
United States [Member] | ||||
Cash balances by geographic area | ||||
Total cash and cash equivalents | $ 8,495 | $ 13,142 | ||
Total cash and cash equivalents, percentage | 0.04% | 0.10% | ||
China [Member] | ||||
Cash balances by geographic area | ||||
Total cash and cash equivalents | $ 18,940,486 | $ 18,777,228 | ||
Total cash and cash equivalents, percentage | 99.96% | 99.90% |
Organization and Summary of S33
Organization and Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Reconciliation of basic and diluted net income per share | ||
Net (loss) income for basic and diluted net (loss) income per share of common stock | $ (844,093) | $ 1,242,434 |
Weighted average common stock outstanding - basic and diluted | 4,100,689 | 3,934,653 |
Net (loss) income per common share - basic and diluted | $ (0.21) | $ 0.32 |
Organization and Summary of S34
Organization and Summary of Significant Accounting Policies (Details Textual) | Nov. 01, 2008 | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | Oct. 12, 2007 |
Organization and Summary of Significant Accounting Policies (Textual) | |||||
Cash and cash equivalents uninsured amount | $ 18,940,486 | $ 18,777,228 | |||
Notes receivable | 119,031 | 132,497 | |||
Allowance for doubtful accounts | 3,239,956 | 3,218,592 | |||
Inventory reserves | 1,100,583 | 1,093,326 | |||
Advances to suppliers | 1,080,998 | 1,038,884 | |||
Advances from customers | 697,789 | $ 433,050 | |||
Revenue recognized on installation and warranty | 16,763 | $ 22,766 | |||
Shipping costs | 34,476 | 252,652 | |||
Employee benefit costs | 47,751 | 68,452 | |||
Advertising expense | 0 | 0 | |||
Research and development | 18,401 | 28,698 | |||
Cumulative translation adjustment and effect of exchange rate changes on cash | $ 125,461 | $ 56,931 | |||
Asset and liability translation rate (RMB to USD) | 6.4479 | 6.4907 | |||
Average translation rates (RMB to USD) | 6.53947 | 6.1358 | |||
Foreign currency translation description | Asset and liability accounts at March 31, 2016 and December 31, 2015 were translated at 6.4479 RMB to $1.00 and at 6.4907 RMB to $1.00, respectively, which were the exchange rates on the balance sheet dates. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of operations for the three months ended March 31, 2016 and 2015 were 6.53947 RMB and 6.1358 RMB to $1.00, respectively. Cash flows from the Company's operations are calculated based upon the local currencies using the average translation rate. | ||||
Period for non-interest bearing amount | 6 months | ||||
Green Power Environment Technology (Shanghai) Co [Member] | |||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||
Percentage of capital stock owned by Fulland | 100.00% | ||||
Operating Agreement [Member] | |||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||
Term of agreement from October 12, 2007 | 20 years | ||||
Option Agreement [Member] | |||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||
Term of agreement from October 12, 2007 | 20 years |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Components of accounts receivable | ||
Accounts receivable | $ 19,432,281 | $ 19,042,451 |
Less: allowance for doubtful accounts | (3,239,956) | (3,218,592) |
Accounts receivable, net | $ 16,192,325 | $ 15,823,859 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Components of inventories | ||
Raw materials | $ 957,577 | $ 690,824 |
Work-in-process | 820,154 | 1,593,815 |
Finished goods | 1,391,058 | 635,771 |
Inventory gross | 3,168,789 | 2,920,410 |
Less: reserve for obsolete inventories | (1,100,583) | (1,093,326) |
Inventory net | $ 2,068,206 | $ 1,827,084 |
Prepaid Expenses and Other (Det
Prepaid Expenses and Other (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Prepaid Expenses and Other [Abstract] | ||
Prepaid income taxes | $ 790,685 | $ 785,471 |
Prepaid stock-based professional fees | 110,350 | |
Prepaid valued added tax on purchase | 89,327 | $ 89,353 |
Other Prepaid Expense, Current | 145,632 | 117,231 |
Prepaid expenses and other | $ 1,135,994 | $ 992,055 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Components of property and equipment | ||
Property and equipment, gross | $ 92,025,841 | $ 91,409,617 |
Less: accumulated depreciation | (41,617,392) | (39,655,653) |
Property and equipment, net | 50,408,449 | 51,753,964 |
Manufacturing equipment [Member] | ||
Components of property and equipment | ||
Property and equipment, gross | $ 66,831,485 | 66,381,394 |
Manufacturing equipment [Member] | Minimum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Manufacturing equipment [Member] | Maximum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 10 years | |
Building and building improvements [Member] | ||
Components of property and equipment | ||
Property and equipment, gross | $ 24,832,012 | 24,668,268 |
Building and building improvements [Member] | Minimum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Building and building improvements [Member] | Maximum [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 20 years | |
Vehicles [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Property and equipment, gross | $ 195,843 | 194,552 |
Office equipment and furniture [Member] | ||
Components of property and equipment | ||
Property and equipment, useful life | 5 years | |
Property and equipment, gross | $ 166,501 | $ 165,403 |
Property and Equipment (Detai39
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 1,674,728 | $ 2,074,507 |
Depreciation included in cost of revenues and operating expenses | $ 1,513,990 | $ 1,729,811 |
Land Use Rights (Details)
Land Use Rights (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Components of land use rights | ||
Land use rights | $ 4,187,533 | $ 4,159,920 |
Less: accumulated amortization | (805,932) | (777,849) |
Land use rights, net | $ 3,381,601 | $ 3,382,071 |
Minimum [Member] | ||
Components of land use rights | ||
Land use rights, Useful Life | 45 years | |
Maximum [Member] | ||
Components of land use rights | ||
Land use rights, Useful Life | 50 years |
Land Use Rights (Details 1)
Land Use Rights (Details 1) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Amortization of land use rights attributable to future periods | ||
2,017 | $ 91,679 | |
2,018 | 91,679 | |
2,019 | 91,679 | |
2,020 | 91,679 | |
2,021 | 91,679 | |
Thereafter | 2,923,206 | |
Land use rights, net | $ 3,381,601 | $ 3,382,071 |
Land Use Rights (Details Textua
Land Use Rights (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Land Use Rights (Textual) | ||
Amortization of land use rights | $ 22,599 | $ 24,086 |
Land use rights expiration date | Expire on January 1, 2053 and October 30, 2053 | |
Minimum [Member] | ||
Land Use Rights (Textual) | ||
Land use rights, Useful Life | 45 years | |
Maximum [Member] | ||
Land Use Rights (Textual) | ||
Land use rights, Useful Life | 50 years |
Short-Term Bank Loans (Details)
Short-Term Bank Loans (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of short-term bank loans | ||
Total short-term bank loans | $ 3,024,240 | $ 3,081,332 |
Loan from Agricultural and Commercial Bank, due on June 16, 2016 [Member] | ||
Summary of short-term bank loans | ||
Total short-term bank loans | $ 697,902 | 693,300 |
Loan from Jiangsu Huishan Mintai Village Town Bank, due on March 1, 2016 [Member] | ||
Summary of short-term bank loans | ||
Total short-term bank loans | $ 770,333 | |
Loan from Jiangsu Huishan Mintai Village Town Bank, due on November 1, 2016 [Member] | ||
Summary of short-term bank loans | ||
Total short-term bank loans | $ 775,446 | |
Loan from Bank of Communications, due on September 3, 2016 [Member] | ||
Summary of short-term bank loans | ||
Total short-term bank loans | $ 775,446 | $ 770,333 |
Loan from Bank of China, due on January 12, 2016 [Member] | ||
Summary of short-term bank loans | ||
Total short-term bank loans | $ 385,166 | |
Loan from Bank of China, due on December 26, 2016 [Member] | ||
Summary of short-term bank loans | ||
Total short-term bank loans | $ 775,446 | |
Loan from Bank of China, due on January 25, 2016 [Member] | ||
Summary of short-term bank loans | ||
Total short-term bank loans | $ 462,200 |
Short-Term Bank Loans (Details
Short-Term Bank Loans (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Short-term bank loans (Textual) | |||
Interest Expense | $ 55,714 | $ 57,343 | |
Loan from Agricultural and Commercial Bank, due on June 16, 2016 [Member] | |||
Short-term bank loans (Textual) | |||
Short-term loan, interest rate, stated percentage | 7.038% | 7.038% | |
Short term bank loan, Maturity date | Sep. 10, 2016 | ||
Loan from Jiangsu Huishan Mintai Village Town Bank, due on March 1, 2016 [Member] | |||
Short-term bank loans (Textual) | |||
Short-term loan, interest rate, stated percentage | 10.56% | ||
Short term bank loan, Maturity date | Mar. 1, 2016 | ||
Loan from Jiangsu Huishan Mintai Village Town Bank, due on November 1, 2016 [Member] | |||
Short-term bank loans (Textual) | |||
Short-term loan, interest rate, stated percentage | 10.56% | ||
Short term bank loan, Maturity date | Nov. 1, 2016 | ||
Loan from Bank of Communications, due on September 3, 2016 [Member] | |||
Short-term bank loans (Textual) | |||
Short-term loan, interest rate, stated percentage | 5.62% | 5.62% | |
Short term bank loan, Maturity date | Sep. 3, 2016 | Sep. 3, 2016 | |
Loan from Bank of China, due on January 12, 2016 [Member] | |||
Short-term bank loans (Textual) | |||
Short-term loan, interest rate, stated percentage | 7.20% | ||
Short term bank loan, Maturity date | Jan. 12, 2016 | ||
Loan from Bank of China, due on December 26, 2016 [Member] | |||
Short-term bank loans (Textual) | |||
Short-term loan, interest rate, stated percentage | 5.97% | ||
Short term bank loan, Maturity date | Dec. 26, 2016 | ||
Loan from Bank of China, due on January 25, 2016 [Member] | |||
Short-term bank loans (Textual) | |||
Short-term loan, interest rate, stated percentage | 7.20% | ||
Short term bank loan, Maturity date | Jan. 25, 2016 |
Bank Acceptance Notes Payable45
Bank Acceptance Notes Payable (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of bank acceptance notes payables | ||
Total | $ 245,041 | $ 647,080 |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on January 9, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | 308,133 | |
Bank of China, non-interest bearing, due and paid on January 16, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | 107,847 | |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on March 21, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | 77,033 | |
Bank of China, non-interest bearing, due and paid on March 23, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | 77,033 | |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on June 29, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | $ 77,545 | $ 77,034 |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on August 29, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | 77,544 | |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on September 25, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | 31,018 | |
Loan from Agricultural and Commercial Bank, due on June 16, 2016 [Member] | ||
Summary of bank acceptance notes payables | ||
Total | $ 58,934 |
Bank Acceptance Notes Payable46
Bank Acceptance Notes Payable (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on January 9, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Jan. 9, 2016 | |
Percentage of assets collateralized for non-interest bearing notes payables | 100.00% | |
Bank of China, non-interest bearing, due and paid on January 16, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Jan. 16, 2016 | |
Percentage of assets collateralized for non-interest bearing notes payables | 100.00% | |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due and paid on March 21, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Mar. 21, 2016 | |
Percentage of assets collateralized for non-interest bearing notes payables | 100.00% | |
Bank of China, non-interest bearing, due and paid on March 23, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Mar. 23, 2016 | |
Percentage of assets collateralized for non-interest bearing notes payables | 100.00% | |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on June 29, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Jun. 29, 2016 | Jun. 29, 2016 |
Percentage of assets collateralized for non-interest bearing notes payables | 100.00% | 100.00% |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on August 29, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Aug. 29, 2016 | |
Percentage of assets collateralized for non-interest bearing notes payables | 100.00% | |
Jiangsu Huishan Mintai Village Town Bank, non-interest bearing, due on September 25, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Sep. 25, 2016 | |
Percentage of assets collateralized for non-interest bearing notes payables | 100.00% | |
Agricultural and Commercial Bank, non-interest bearing, due on September 10, 2016 [Member] | ||
Bank Acceptance Notes Payable (Textual) | ||
Debt Instrument, Maturity Date | Sep. 10, 2016 | |
Restricted cash | $ 69,790 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 | |
Accrued Expenses [Abstract] | |||
Accrued liability for claimed sale contract dispute | [1] | $ 5,599,287 | $ 5,562,365 |
Accrued salaries and related benefits | 85,657 | 465,514 | |
Accrued professional fees | 36,517 | 171,433 | |
Other payables | 93,308 | 161,767 | |
Total accrued expenses | $ 5,814,769 | $ 6,361,079 | |
[1] | In December 2015, the Company received a notice of contract termination in writing from its largest customer, which was a customer in the petroleum and chemical equipment segment, alleging breach of contract for late delivery of product and for delivery of product with quality defects. Pursuant to the sales contract, the customer demanded payment of a penalty of 20% of the contract price plus penalties for late delivery and damages in the amounts of 36,103,640 RMB ($5,599,287 and $5,562,365 at March 31, 2016 and December 31, 2015, respectively) which has been included in accrued expenses. |
Accrued Expenses (Details Textu
Accrued Expenses (Details Textual) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) |
Accrued Expenses (Textual) | |||
Customer demanded payment of penalty percentage | 20.00% | 20.00% | |
Contract price plus penalties for late delivery and damages | $ 5,599,287 | $ 5,562,365 | ¥ 36,103,640 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stockholders' Equity (Textual) | ||
Common stock issued for services, shares | 460,000 | |
Common stock issued for services, value | $ 110,350 | |
Reduced accrued liabilities | (516,730) | $ (515,767) |
Stock-based compensation | 428,250 | $ 274,400 |
Prepaid expense | $ 110,350 | |
2010 long-term incentive plan [Member] | ||
Stockholders' Equity (Textual) | ||
Common stock issued for services, shares | 300,000 | |
Stock-based compensation | $ 393,000 | |
2010 long-term incentive plan [Member] | Chief Financial Officer [Member] | ||
Stockholders' Equity (Textual) | ||
Common stock issued for services, shares | 160,000 | |
Common stock issued for services, value | $ 209,600 | |
Reduced accrued liabilities | 64,000 | |
Stock-based compensation | 35,250 | |
Prepaid expense | $ 110,350 |
Statutory Reserve (Details Text
Statutory Reserve (Details Textual) | 3 Months Ended |
Mar. 31, 2016 | |
Statutory Reserve (Textual) | |
Appropriation to the statutory surplus reserve, Description | Statutory reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the "PRC GAAP"). Appropriation to the statutory reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities' registered capital or members' equity. |
Appropriations of registered capital to statutory reserves, Description | Maximum 50% of its registered capital to statutory reserve for Dyeing and Heavy Industries; accordingly, no additional statutory reserve is required for the three months ended March 31, 2016. |
Company had not appropriated required maximum of registered capital to statutory reserves, Description | Maximum 50% of its registered capital to statutory reserve for Fulland Wind Energy. During the three months ended March 31, 2016, the Company did not make any appropriations to statutory reserve for Fulland Wind Energy as it incurred recurring net loss. |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | ||
Segment reporting information revenue [Abstract] | ||||
Revenues | $ 4,919,491 | $ 15,646,465 | ||
Depreciation | 1,674,728 | 2,074,507 | ||
Interest expense | 55,714 | 57,343 | ||
Net income (loss) | (844,093) | 1,242,434 | ||
Identifiable long-lived tangible assets by segment | 50,408,449 | $ 51,753,964 | ||
Identifiable long-lived tangible assets by geographical location | 50,408,449 | 51,753,964 | ||
Dyeing and Finishing Equipment [Member] | ||||
Segment reporting information revenue [Abstract] | ||||
Revenues | 4,526,700 | 6,523,352 | ||
Depreciation | 955,279 | 862,084 | ||
Interest expense | 32,610 | 35,658 | ||
Net income (loss) | 368,455 | 748,216 | ||
Identifiable long-lived tangible assets by segment | 25,146,775 | 25,782,801 | ||
Forged Rolled Rings and Related Components [Member] | ||||
Segment reporting information revenue [Abstract] | ||||
Revenues | 262,055 | 7,273,612 | ||
Depreciation | 662,555 | 698,441 | ||
Interest expense | 12,242 | 8,104 | ||
Net income (loss) | (698,078) | 613,663 | ||
Identifiable long-lived tangible assets by segment | 13,775,724 | 14,212,045 | ||
Petroleum and Chemical Equipment [Member] | ||||
Segment reporting information revenue [Abstract] | ||||
Revenues | 130,736 | 1,849,501 | ||
Depreciation | 56,894 | 513,982 | ||
Interest expense | 10,862 | 13,581 | ||
Net income (loss) | (42,436) | 226,429 | ||
Identifiable long-lived tangible assets by segment | 11,485,950 | 11,759,118 | ||
Other [Member] | ||||
Segment reporting information revenue [Abstract] | ||||
Net income (loss) | [1] | (472,034) | $ (345,874) | |
China [Member] | ||||
Segment reporting information revenue [Abstract] | ||||
Identifiable long-lived tangible assets by geographical location | $ 50,408,449 | $ 51,753,964 | ||
United States [Member] | ||||
Segment reporting information revenue [Abstract] | ||||
Identifiable long-lived tangible assets by geographical location | ||||
[1] | The Company does not allocate any general and administrative expense of its U.S. activities to its reportable segments, because these activities are managed at a corporate level. |
Segment Information (Details Te
Segment Information (Details Textual) - Segment | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Segment Information (Textual) | ||
Number of reportable business segments | 3 | 3 |
Concentration (Details)
Concentration (Details) - Revenue [Member] | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | |||
Concentration of revenue from customers | ||||
Concentration risk percentage | 10.00% | 10.00% | ||
Customer A [Member] | ||||
Concentration of revenue from customers | ||||
Concentration risk percentage | 18.00% | [1] | ||
Customer B [Member] | ||||
Concentration of revenue from customers | ||||
Concentration risk percentage | 16.00% | [1] | ||
Customer C [Member] | ||||
Concentration of revenue from customers | ||||
Concentration risk percentage | [1] | 12.00% | ||
Customer D [Member] | ||||
Concentration of revenue from customers | ||||
Concentration risk percentage | 12.00% | [1] | ||
Customer E [Member] | ||||
Concentration of revenue from customers | ||||
Concentration risk percentage | 11.00% | [1] | ||
[1] | Less than 10%. |
Concentration (Details 1)
Concentration (Details 1) - Purchase [Member] | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | |||
Concentration of purchase from suppliers | ||||
Concentration risk supplier, Percentage | 10.00% | 10.00% | ||
Supplier A [Member] | ||||
Concentration of purchase from suppliers | ||||
Concentration risk supplier, Percentage | 24.00% | 22.00% | ||
Supplier B [Member] | ||||
Concentration of purchase from suppliers | ||||
Concentration risk supplier, Percentage | [1] | 21.00% | ||
Supplier C [Member] | ||||
Concentration of purchase from suppliers | ||||
Concentration risk supplier, Percentage | 16.00% | [1] | ||
[1] | Less than 10%. |
Concentration (Details Textual)
Concentration (Details Textual) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Revenue [Member] | |||
Concentration (Textual) | |||
Concentration risk percentage | 10.00% | 10.00% | |
Revenue [Member] | Accounts Receivable [Member] | |||
Concentration (Textual) | |||
Suppliers accounted for total purchase | The four largest customers | ||
Concentration risk percentage | 16.10% | 10.00% | |
Purchase [Member] | |||
Concentration (Textual) | |||
Concentration risk percentage | 10.00% | 10.00% | |
Purchase [Member] | Accounts Payable [Member] | |||
Concentration (Textual) | |||
Suppliers accounted for total purchase | The two largest suppliers | Three largest suppliers | |
Concentration risk percentage | 6.80% | 13.60% |
Restricted Net Assets (Details)
Restricted Net Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Mar. 31, 2016 | |
Restricted Net Assets (Textual) | ||
Annual appropriations required by statutory reserve fund | At least 10% of after-tax profit, if any, of the relevant PRC VIE's and subsidiary. | |
Company's restricted net assets | $ 79,627,000 | $ 79,781,000 |