Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 27, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CHINA PHARMA HOLDINGS, INC. | ||
Entity Central Index Key | 1,106,644 | ||
Entity Trading Symbol | CPHI | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 1,045,054 | ||
Entity Common Stock, Shares Outstanding | 43,579,557 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 2,030,214 | $ 2,665,802 |
Restricted cash | 709,796 | 1,088,879 |
Banker's acceptances | 39,867 | |
Trade accounts receivable, less allowance for doubtful accounts of $18,209,734 and $15,664,496, respectively | 2,293,120 | 3,999,809 |
Other receivables, less allowance for doubtful accounts of $40,010 and $71,548, respectively | 162,981 | 224,373 |
Advances to suppliers | 461,307 | 2,003,792 |
Inventory | 6,407,155 | 7,310,939 |
Prepaid expenses | 185,647 | 226,357 |
Total Current Assets | 12,290,087 | 17,519,951 |
Advances for purchases of intangible assets | 23,722,954 | 35,498,059 |
Property and equipment, net | 23,541,003 | 24,967,448 |
Intangible assets, net | 398,856 | 534,682 |
TOTAL ASSETS | 59,952,900 | 78,520,140 |
Current Liabilities: | ||
Trade accounts payable | 1,141,138 | 3,060,374 |
Accrued expenses | 276,368 | 139,830 |
Other payables | 2,858,701 | 2,502,694 |
Advances from customers | 581,132 | 811,232 |
Other payables - related parties | 1,354,567 | 1,354,567 |
Current portion of construction loan facility | 2,305,430 | 1,440,154 |
Bankers' acceptance notes payable | 709,796 | 1,088,879 |
Total Current Liabilities | 9,227,132 | 10,397,730 |
Non-current Liabilities: | ||
Construction loan facility | 6,916,291 | 8,640,927 |
Deferred tax liability | 738,175 | 572,349 |
Total Liabilities | 16,881,598 | 19,611,006 |
Stockholders' Equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.001 par value; 95,000,000 shares authorized; 43,579,557 shares and 43,579,557 shares outstanding, respectively | 43,580 | 43,580 |
Additional paid-in capital | 23,590,204 | 23,590,204 |
Retained earnings | 5,479,809 | 24,757,374 |
Accumulated other comprehensive income | 13,957,709 | 10,517,976 |
Total Stockholders' Equity | 43,071,302 | 58,909,134 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 59,952,900 | $ 78,520,140 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, less allowance for doubtful accounts | $ 18,209,734 | $ 15,664,496 |
Other receivables, less allowance for doubtful accounts | $ 40,010 | $ 71,548 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 43,579,557 | 43,579,557 |
Common stock, shares outstanding | 43,579,557 | 43,579,557 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 13,212,314 | $ 15,570,514 |
Cost of revenue | 10,743,764 | 12,352,004 |
Gross profit | 2,468,550 | 3,218,510 |
Operating expenses: | ||
Selling expenses | 3,460,596 | 4,036,590 |
General and administrative expenses | 2,019,949 | 2,265,851 |
Research and development expenses | 90,474 | 365,969 |
Bad debt expense | 1,393,576 | 1,086,449 |
Impairment loss | 14,183,969 | 3,962,141 |
Total operating expenses | 21,148,564 | 11,717,000 |
Subsidy income | 343,023 | |
Loss from operations | (18,680,014) | (8,155,467) |
Other income (expense): | ||
Interest income | 64,414 | 130,575 |
Interest expense | (539,334) | (849,557) |
Net other expense | (474,920) | (718,982) |
Loss before income taxes | (19,154,934) | (8,874,449) |
Income tax expense | (122,631) | (308,175) |
Net loss | (19,277,565) | (9,182,624) |
Other comprehensive income - foreign currency translation adjustment | 3,439,733 | (4,549,391) |
Comprehensive loss | $ (15,837,832) | $ (13,732,015) |
Loss per share: | ||
Basic and diluted | $ (0.44) | $ (0.21) |
Weighted average shares outstanding | 43,579,557 | 43,579,557 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Beginning balance at Dec. 31, 2015 | $ 43,580 | $ 23,590,204 | $ 33,939,998 | $ 15,067,367 | $ 72,641,149 |
Beginning balance, shares at Dec. 31, 2015 | 43,579,557 | ||||
Net loss for the year | (9,182,624) | (9,182,624) | |||
Foreign currency translation adjustment | (4,549,391) | (4,549,391) | |||
Ending balance at Dec. 31, 2016 | $ 43,580 | 23,590,204 | 24,757,374 | 10,517,976 | 58,909,134 |
Ending balance, shares at Dec. 31, 2016 | 43,579,557 | ||||
Net loss for the year | (19,277,565) | (19,277,565) | |||
Foreign currency translation adjustment | 3,439,733 | 3,439,733 | |||
Ending balance at Dec. 31, 2017 | $ 43,580 | $ 23,590,204 | $ 5,479,809 | $ 13,957,709 | $ 43,071,302 |
Ending balance, shares at Dec. 31, 2017 | 43,579,557 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (19,277,565) | $ (9,182,624) |
Depreciation and amortization | 3,291,330 | 3,078,074 |
Inventory write off | 118,003 | |
Bad debt expense | 1,393,576 | 1,086,449 |
Deferred income taxes | 122,631 | 308,175 |
Impairment loss | 14,183,969 | 3,962,141 |
Changes in assets and liabilities: | ||
Trade accounts and other receivables | 51,024 | (1,097,556) |
Advances to suppliers | 1,614,958 | 380,779 |
Inventory | 1,718,336 | 2,734,612 |
Trade accounts payable | (2,045,948) | 815,198 |
Accrued taxes payable | 18,753 | 72,107 |
Other payables and accrued expenses | 420,523 | 377,663 |
Advances from customers | (274,068) | 265,928 |
Prepaid expenses | (494,306) | 94,762 |
Net Cash Provided by Operating Activities | 841,216 | 2,895,708 |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (136,479) | (193,404) |
Net Cash Used in Investing Activities | (136,479) | (193,404) |
Cash Flows from Financing Activities: | ||
Payments of construction term loan | (1,479,944) | (1,505,346) |
Payments of short term notes payable | (4,516,039) | |
Net Cash Provided by Financing Activity | (1,479,944) | (6,021,385) |
Effect of Exchange Rate Changes on Cash | 139,619 | (263,877) |
Net (Decrease) Increase in Cash and Cash Equivalents | (635,588) | (3,582,958) |
Cash and Cash Equivalents at Beginning of Period | 2,665,802 | 6,248,760 |
Cash and Cash Equivalents at End of Period | 2,030,214 | 2,665,802 |
Supplemental Cash Flow Information: | ||
Cash paid for income taxes | ||
Cash paid for interest | 525,788 | 836,011 |
Supplemental Noncash Investing and Financing Activities: | ||
Issuance of banker's acceptances | 709,796 | 1,088,879 |
Accounts receivable collected with banker's acceptances | 531,294 | 935,265 |
Inventory purchased with banker's acceptances | $ 492,906 | $ 935,265 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations – On December 31, 2012, China Pharma Holdings, Inc. consummated a reincorporation merger for the purpose of changing its state of incorporation from Delaware to Nevada pursuant to the terms and conditions of an Agreement and Plan of Merger dated December 27, 2012. The reincorporation merger was approved by stockholders holding the majority of the Company’s outstanding shares of common stock on December 21, 2012. The Foreign Investment Industrial Catalogue Helpson manufactures and markets generic and branded pharmaceutical products as well as biochemical products primarily to hospitals and private retailers located throughout the PRC. The Company believes Helpson’s business is not subject to any ownership restrictions prescribed under the Catalogue. Onny acquired 100% of the ownership in Helpson on May 25, 2005 by entering into an Equity Transfer Agreement with Helpson’s three former shareholders. The transaction was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for Establishment of Enterprises with Foreign Investment in the PRC on the same day and its business license evidencing its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005. The Company has acquired and continues to acquire well-accepted medical formulas to add to its diverse portfolio of Western and Chinese medicines. Consolidation and Basis of Presentation Helpson’s functional currency is the Chinese Renminbi. Helpson’s revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating Helpson’s financial statements are included in accumulated other comprehensive income, which is a component of stockholders’ equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is party to the transaction are included in the results of operations. Accounting Estimates Cash and Cash Equivalents Restricted Cash Trade Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable that have been fully allowed for and determined to be uncollectible are charged against the allowance in the period the determination is made. The Company charged off uncollectible trade accounts receivable balances in the amount of $0 and $13.5 million against the allowance for the years ended December 31, 2017 and 2016, respectively. It is common practice in the PRC for receivables to extend beyond one year. Customer balances outstanding for more than one year are allowed for at a greater rate when calculating the allowance for doubtful accounts. Advances to Suppliers and Advances from Customers Inventory Valuation of Long-Lived Assets Property and Equipment Revenue Recognition Cost of Revenues Research and Development Retirement Benefit Plans Advertising Costs Basic and Diluted Loss per Common Share There were no potentially dilutive common shares outstanding during the years ended December 31, 2017 and 2016, respectively. Credit Risk The Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors’ interests. The PRC promulgated a new Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. In the event that bankruptcy laws are enacted for banks in the PRC, the Company’s deposits may be at a higher risk of loss. Interest Rate Risk Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” The standard allows for two transition methods - retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial adoption. The Company has determined its method of transition and evaluated that this guidance will not have any impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through the issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 2 – INVENTORY Inventory consisted of the following: December 31, December 31, 2017 2016 Raw materials $ 4,733,679 $ 5,962,271 Work in process 481,863 360,550 Finished goods 1,191,613 988,118 $ 6,407,155 $ 7,310,939 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following: December 31, December 31, 2017 2016 Permit of land use $ 432,910 $ 405,645 Building 10,052,840 9,419,700 Plant, machinery and equipment 28,044,515 26,151,029 Motor vehicle 330,598 309,777 Office equipment 200,974 182,718 Total 39,061,837 36,468,869 Less: accumulated depreciation (15,520,834 ) (11,501,421 ) Property and Equipment, net $ 23,541,003 $ 24,967,448 Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Asset Life - years Permit of land use 40 - 70 Building 20 - 49 Plant, machinery and equipment 5 - 10 Motor vehicle 5 - 10 Office equipment 3-5 Depreciation relating to office equipment was included in general and administrative expenses, while all other depreciation was included in cost of revenue. For the years ended December 31, 2017 and 2016, depreciation expense was $3,125,937 and $2,815,167, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4 - INTANGIBLE ASSETS Intangible assets represent the cost of medical formulas approved for production by the CFDA. The Company did not obtain CFDA production approval for any medical formula during the year ended December 31, 2017 and 2016 and no costs were reclassified from advances to intangible assets in 2017 and 2016, respectively. Approved medical formulas are amortized from the date CFDA approval is obtained over their individually identifiable estimated useful life, which range from ten to thirteen years. It is at least reasonably possible that a change in the estimated useful lives of the medical formulas could occur in the near term due to changes in the demand for the drugs and medicines produced from these medical formulas. Amortization expense relating to intangible assets was $165,394 and $262,908 for the years ended December 31, 2017 and 2016, respectively, and was included in the general and administrative expenses. Medical formulas typically do not have a residual value at the end of their amortization period. Intangible assets consisted solely of CFDA approved medical formulas as follows: December 31, December 31, 2017 2016 Gross carrying amount $ 5,188,547 $ 4,861,766 Accumulated amortization (4,789,691 ) (4,327,084 ) Net carrying amount $ 398,856 $ 534,682 The estimated aggregate annual amortization expense for each of the next five years and thereafter is as follows: Year Amount 2018 117,257 2019 61,140 2020 37,793 2021 37,793 2022 37,793 Thereafter 107,080 Total $ 398,856 |
Advances for Purchases of Intan
Advances for Purchases of Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Advances for Purchases of Intangible Assets [Abstract] | |
ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS | NOTE 5 – ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS In order to expand the number of medicines the Company manufactured and marketed, it has entered into contracts with independent laboratories and others for the purchase of medical formulas. Although CFDA approval had not been obtained for these medical formulas at the dates of the respective contracts, the objective of the contracts is for the Company to purchase CFDA-approved medical formulas once the CFDA approval process is completed. The Company received the titles to two patents that relate to medical formulas currently in the CFDA approval process for the year end December 31, 2013. These patents have not expired. Prior to entering into contracts with the Company, laboratories are typically required to complete all research and development to determine the content of the medical formula and the method to produce the generic medicine. The application to the CFDA for production approval must be made by the production facility that will produce the related product. As a result, a contract typically provides that the Company buys the medical formula from the laboratory and the laboratory is required to assist the Company in applying for and obtaining the production approval from the CFDA. A typical CFDA approval process for the production of a generic medical product involves a number of steps that generally require three to five years to complete. If the medical formula is purchased at the point when the generic medical product receives the CFDA’s approval for a clinical study, which is very typical for the Company, the clinical study that follows will usually take from one and a half to three years to complete. After completing the clinical study, the results are submitted to the CFDA and a production approval application is filed with the CFDA. In most cases, it will take between eight to eighteen months to prepare and submit the production approval application and obtain CFDA approval. Upon approving the generic medical product, the CFDA issues a production certificate and the Company can commence the production and sales of the generic medical product. As a result of this process, CFDA approval is expected to be received in approximately two to five years from the date the Company signs the medical formula contracts. Under the terms of the contracts, the laboratories are required to assist the Company in obtaining production approval for the medical formulas from the CFDA. Management monitors the status of each medical formula on a regular basis in order to assess whether the laboratories are performing adequately under the contracts. If a medical product is not approved by the CFDA, as evidenced by their issuance of a denial letter, or if the laboratory breaches the contract, the laboratory is required under the contract to provide a refund to the Company of the full amount of the payments made to the laboratory for that formula, or the Company can require the application of those payments to another medical formula with the same laboratory. As a result of the refund right, the Company is ultimately purchasing an approved medical product. Accordingly, payments made prior to the issuance of production approval by the CFDA are recorded as advances for purchases of intangible assets. To date, no formula has failed to receive CFDA production approval nor has the Company been informed or been made aware of any formula that may fail to receive such approval. However, there is no assurance that the medical products will receive production approval and if the Company does not receive such approval, it will enforce its contractual rights to receive a refund from the laboratory or have the payments applied to another medical formula with the same laboratory. As of December 31, 2017, the Company was obligated to pay laboratories and others approximately $1.1 million upon the completion of various phases of contracts to obtain CFDA production approval of medical formulas. During the year ended December 31, 2017, the Company reviewed the contracts relating to advances made for purchases of intangible assets with independent laboratories and determined that the advances made by the Company for four formulas to three of the independent laboratories were impaired. During the year ended December 31, 2016, with CFDA’s tightened scrutiny procedure in connection with its review of production applications and based on the Company’s monitoring and assessment process, the Company determined six advanced payments to six independent laboratories were impaired. As a result, the Company recognized an impairment loss for the advances made to these laboratories for the years ended December 31, 2017 and 2016 in the amount of $14,183,969 and $3,962,141, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS A member of the Company’s board of directors (the “Board”) had previously advanced the Company an aggregate amount of $1,354,567 as of December 31, 2017 and 2016 which are recorded as other payables – related parties on the accompanying consolidated balance sheets. The advances bear interest at a rate of 1.0% per year. Total interest expense of $13,546 was recognized for each of the years ended December 31, 2017 and 2016. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 7 – NOTES PAYABLE In November 2014, the Company entered into a line of credit with a bank in the amount of RMB 30,000,000 (approximately $4.5 million). Advances on the line of credit were due one year from the date of the advance and were collateralized by certain land use rights, buildings and accounts receivable and bear interest at an annual rate of 6.16% (based upon 110% of the PRC government’s short term rate of 5.6% in November 2014). In addition, the Company’s Chief Executive Officer and Chair of the Board personally guaranteed the line of credit. In November, 2015 the Company renewed its line of credit in the amount of RMB 30,000,000 (approximately $4,498,169 with the same bank. The line of credit was fully paid in two equal installments of RMB 15,000,000 (approximately $2.25 million) payable on September 16, 2016 and October 19, 2016, respectively. |
Banker's Acceptance Notes Payab
Banker's Acceptance Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Banking and Thrift [Abstract] | |
BANKER'S ACCEPTANCE NOTES PAYABLE | NOTE 8 – BANKER’S ACCEPTANCE NOTES PAYABLE In April 2016, the Company entered into a “Banker’s Acceptance Note Agreement” with a bank. Pursuant to the terms of the agreement, the Company can issue banker’s acceptance notes (the “Banker’s Notes”) to any third party as payment of amounts owing to that third party. The Company is required to deposit with the bank an amount equal to the amounts represented by the Banker’s Notes issued to the third parties. The amount of these deposited balances is shown as “Restricted cash” on the accompanying balance sheets as of September 30, 2016. The maximum amount that the Company can issue under this agreement is limited to the lesser of RMB 30,000,000 (approximately $4.5 million) or the amount of cash available to deposit against the Banker’s Notes. In addition, the agreement calls for the payment of fees equal to 0.05% of the note amount to the bank. At December 31 2017 and 2016, the Company had outstanding Banker’s Acceptance Notes in the amount of $709,796 and $1,088,879, respectively. |
Construction Loan Facility
Construction Loan Facility | 12 Months Ended |
Dec. 31, 2017 | |
Construction Loan Facility | |
CONSTRUCTION LOAN FACILITY | NOTE 9 – CONSTRUCTION LOAN FACILITY The Company obtained a construction loan facility in the aggregate amount of RMB 80,000,000 (approximately $13 million) from a construction loan facility dated June 21, 2013. The loan facility is for an eight-year term, which commenced on July 11, 2013, the initial draw-down date. The total loan facility is from the same bank that provided the line of credit as discussed in Note 7. The proceeds of the loan were used for and are collateralized by the construction of the Company’s new production facility and the included production line equipment and machinery. The loan bears interest based upon 110% of the PRC government’s eight-year term rate effective on the actual draw-down date, subject to annual adjustments based on 110% of the floating rate for the same type of loan on the anniversary from the draw-down date and its subsequent anniversary dates. On July 10, 2015, 2016 and 2017 the interest rate was adjusted to 5.94%, 5.39% and 5.73%, respectively. The loan required interest only payments for the first two years. Beginning July 11, 2015, the balance of the principal was due in at least two (2) annual installments with the first annual payment being due within six month period after July 10, 2015 and the second annual payment being due July 10, 2016 and each following year over the next five years through July 11, 2022 on the identical terms as described above for 2015. For the years ended December 31, 2017 and 2016, the Company has made all required payments due under the loan. As of December 31, 2017, the Company had no additional amounts available to it under this facility. Principal payments required for the next five years as of December 31, 2017 are as follows: Year Amount 2018 2,305,430 2019 2,305,430 2020 2,305,430 2021 2,305,431 $ 9,221,721 Fair Value of Construction Loan Facility |
Subsidy Income
Subsidy Income | 12 Months Ended |
Dec. 31, 2017 | |
Subsidy Income | |
Subsidy Income | NOTE 10 – SUBSIDY INCOME During the years ended December 31, 2017 and 2016, the Company received cash of $0 and $0.34 million related to a subsidy from the government for the technological innovation it has achieved and the industrial upgrading related to its new GMP certified facility. This has been recorded as “Subsidy income” in the accompanying Statement of Operations for the years ended December 31, 2017 and 2016, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11 - INCOME TAXES Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income in the period that includes the enactment date. Liabilities are established for uncertain tax positions expected to be taken in income tax return when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a component of other expenses. Through December 31, 2017, the Company has not identified any uncertain tax positions that it has taken. U.S. income tax returns for the years ended December 31, 2014 through December 31, 2017 and the Chinese income tax return for the year ended December 31, 2017 are open for possible examination. On March 16, 2007, the National People’s Congress of China passed the Enterprise Income Tax Law (EIT Law) and on December 6, 2007, the State Council of China issued the Implementation Regulations for the EIT Law which took effect on January 1, 2008. The EIT Law and Implementation Regulations Rules impose a unified EIT of 25% on all domestic-invested enterprises and Foreign Invested Entities, or FIEs, unless they qualify under certain limited exceptions. The Company is located in a special region, which had a 15% corporate income tax rate before the new EIT Law. The new EIT Law abolished the preferential corporate income tax rate in the special region. The Company transitioned to the new 25% tax rate over a five year period which began on January 1, 2008. During 2010, the Company applied for and received a favorable tax rate of 15% for fiscal 2011 through 2013 due to its status in the PRC as a high technology enterprise. In 2013, the Company again applied for and received the same favorable tax rate for 2014 to 2016. The recent net losses have put the Company in an unfavorable position for the potential renewal of “National High-Tech Enterprise” status in 2017. After evaluating the feasibility of the renewal, the Company has decided not to renew this status. Under the current tax law in the PRC, the Company is and will be subject to the following enterprise income tax rates: Year Enterprise Income Tax Rate 2016 15% 2017 25% 2018 25% Thereafter 25% The provision for income taxes consisted of the following: Year Ended December 31, 2017 2016 Current $ - $ - Deferred 122,631 308,175 Total income tax expense $ 122,631 $ 308,175 Following is a reconciliation of income taxes calculated at the federal statutory rates to the provision for income taxes: Years Ended December 31, 2017 2016 (Benefit) tax at statutory rate of 25% $ (4,788,734 ) $ (2,218,612 ) Effect of tax holiday - 837,089 Effect of change in tax rate from 15% to 25% - (8,094,456 ) Other, primarily the difference in U.S. tax rates 8,077 7,903 Change in valuation allowance 4,903,288 9,776,251 Income tax expense $ 122,631 $ 308,175 The effect of the tax holiday in 2016 amounted to a change in the tax expense of $837,089, which was equivalent to basic and diluted earnings per share of ($0.01) per share for the year ended December 31, 2016. The temporary differences which give rise to the deferred income tax assets and liability are as follows: December 31, 2017 2016 Deferred income tax assets: Allowance for doubtful trade receivables $ 4,552,432 $ 3,916,124 Allowance for doubtful other receivables 10,002 17,959 Inventory obsolescence reserve 1,595,671 1,535,660 Expenses not deductible in current year 1,076,126 1,008,350 Advances for intangible assets impairment 4,387,237 793,624 PRC net operating loss carry forward 14,572,439 12,660,410 U.S. net operating loss carry forward 1,076,830 1,520,675 Total deferred income tax assets 27,270,737 21,452,802 Valuation allowance (27,270,737 ) (21,452,802 ) Net deferred income tax asset $ - $ - Deferred income tax liability: Intangible assets $ 738,175 $ 572,349 As of December 31, 2017, the Company had net operating loss carryforwards for PRC tax purposes of approximately $58.3 million which are available to offset any future taxable income through 2022. The Company also has net operating losses for United States federal income tax purposes of approximately $5.1 million which are available to offset future taxable income, if any, through 2037. Recent U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment. The decrease in the United States federal corporate income tax rate from 34% to 21% for 2018 decreased the valuation allowance related to the U.S. net operating losses by approximately $667,000 at December 31, 2017. There was no liability at December 31, 2017 for the mandatory deemed repatriation tax. In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those differences become deductible or tax loss carry forwards are utilized. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods on which the deferred tax assets are deductible or can be utilized, Management believes it is not likely for the Company to realize all benefits of the deferred tax assets as of December 31, 2017 and 2016. Therefore, the Company provided for a valuation allowance against its deferred tax assets of $27,270,737 and $21,452,802 as of December 31, 2017 and 2016, respectively. The Company is also subject to various other taxes, comprised primarily of business taxes, value-added taxes, urban construction taxes, education surcharges and others. Any unpaid amounts are reflected on the balance sheets as accrued taxes payable. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 12 - STOCKHOLDERS’ EQUITY The Company is authorized to issue 95,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value. The preferred stock may be issued in series with such designations, preferences, stated values, rights, qualifications or limitations as determined solely by the Company’s board of directors. Employee Stock Options 2010 Incentive Plan On November 12, 2010, the Company’s Board of Directors adopted the Company’s 2010 Incentive Plan (the “Plan”), which was then approved by stockholders on December 22, 2010. The Plan gave the Company the ability to grant stock options, restricted stock, stock appreciation rights and performance units to its employees, directors and consultants, or those who will become employees, directors and consultants of the Company and/or its subsidiaries. The Plan currently allows for equity awards of up to 4,000,000 shares of common stock. Through December 31, 2017, there were 175,000 shares of restricted stock granted and outstanding under the Plan. No options were outstanding as of December 31, 2017 under the Plan. There were no securities issued from the Plan during each of the years ended December 31, 2017 and 2016. The Company recognized no compensation expense related to the awards of common shares and the grants and modifications of stock options during each of the years ended December 31, 2017 and 2016. The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model. Expected volatility is based on the historical volatility of the Company’s common stock prices. The Company uses historical data to estimate employee termination rates. The expected term of options granted is determined by the simplified method, which is one-half of the original contractual term. The simplified method is used due to the lack of historical share option exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. As of December 31, 2017, there was no remaining unrecognized compensation expense related to stock options or restricted stock grants. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 – COMMITMENTS AND CONTINGENCIES Economic environment In addition, all of the Company’s revenue is denominated in the PRC’s currency of Renminbi (RMB), which must be converted into other currencies before remittance out of the PRC. Both the conversion of RMB into foreign currencies and the remittance of foreign currencies abroad require approval of the PRC government. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 14 – CONCENTRATIONS For the year ended December 31, 2017, no customer accounted for more than 10.0% of sales and four suppliers accounted for 19.8%, 17.1%, 15.4% and 11.8% of raw material purchases, two customers accounted for 47.4% and 14.0% of accounts receivable, and three different products accounted for 41%, 17% and 16% of revenue. For the year ended December 31, 2016, no customer accounted for more than 10.0% of sales and one supplier accounted for 21.1% of raw material purchases, one customer accounted for 46.3% of accounts receivable, and three different products accounted for 49.0%, 14.0% and 11.0% of revenue. |
Organization and Significant 21
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations – On December 31, 2012, China Pharma Holdings, Inc. consummated a reincorporation merger for the purpose of changing its state of incorporation from Delaware to Nevada pursuant to the terms and conditions of an Agreement and Plan of Merger dated December 27, 2012. The reincorporation merger was approved by stockholders holding the majority of the Company’s outstanding shares of common stock on December 21, 2012. The Foreign Investment Industrial Catalogue Helpson manufactures and markets generic and branded pharmaceutical products as well as biochemical products primarily to hospitals and private retailers located throughout the PRC. The Company believes Helpson’s business is not subject to any ownership restrictions prescribed under the Catalogue. Onny acquired 100% of the ownership in Helpson on May 25, 2005 by entering into an Equity Transfer Agreement with Helpson’s three former shareholders. The transaction was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for Establishment of Enterprises with Foreign Investment in the PRC on the same day and its business license evidencing its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005. The Company has acquired and continues to acquire well-accepted medical formulas to add to its diverse portfolio of Western and Chinese medicines. |
Consolidation and Basis of Presentation | Consolidation and Basis of Presentation Helpson’s functional currency is the Chinese Renminbi. Helpson’s revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating Helpson’s financial statements are included in accumulated other comprehensive income, which is a component of stockholders’ equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is party to the transaction are included in the results of operations. |
Accounting Estimates | Accounting Estimates |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash |
Trade Accounts Receivable and Allowance for Doubtful Accounts | Trade Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable that have been fully allowed for and determined to be uncollectible are charged against the allowance in the period the determination is made. The Company charged off uncollectible trade accounts receivable balances in the amount of $0 and $13.5 million against the allowance for the years ended December 31, 2017 and 2016, respectively. It is common practice in the PRC for receivables to extend beyond one year. Customer balances outstanding for more than one year are allowed for at a greater rate when calculating the allowance for doubtful accounts. |
Advances to Suppliers and Advances from Customers | Advances to Suppliers and Advances from Customers |
Inventory | Inventory |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets |
Property and Equipment | Property and Equipment |
Revenue Recognition | Revenue Recognition |
Cost of Revenues | Cost of Revenues |
Research and Development | Research and Development |
Retirement Benefit Plans | Retirement Benefit Plans |
Advertising Costs | Advertising Costs |
Basic and Diluted Loss per Common Share | Basic and Diluted Loss per Common Share There were no potentially dilutive common shares outstanding during the years ended December 31, 2017 and 2016, respectively. |
Credit Risk | Credit Risk The Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors’ interests. The PRC promulgated a new Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. In the event that bankruptcy laws are enacted for banks in the PRC, the Company’s deposits may be at a higher risk of loss. |
Interest Rate Risk | Interest Rate Risk |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” The standard allows for two transition methods - retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial adoption. The Company has determined its method of transition and evaluated that this guidance will not have any impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through the issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements. |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | December 31, December 31, 2017 2016 Raw materials $ 4,733,679 $ 5,962,271 Work in process 481,863 360,550 Finished goods 1,191,613 988,118 $ 6,407,155 $ 7,310,939 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property plant and equipment | December 31, December 31, 2017 2016 Permit of land use $ 432,910 $ 405,645 Building 10,052,840 9,419,700 Plant, machinery and equipment 28,044,515 26,151,029 Motor vehicle 330,598 309,777 Office equipment 200,974 182,718 Total 39,061,837 36,468,869 Less: accumulated depreciation (15,520,834 ) (11,501,421 ) Property and Equipment, net $ 23,541,003 $ 24,967,448 |
Scedule of depreciation is computed on straight-line basis over estimated useful lives of assets | Asset Life - years Permit of land use 40 - 70 Building 20 - 49 Plant, machinery and equipment 5 - 10 Motor vehicle 5 - 10 Office equipment 3-5 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | December 31, December 31, 2017 2016 Gross carrying amount $ 5,188,547 $ 4,861,766 Accumulated amortization (4,789,691 ) (4,327,084 ) Net carrying amount $ 398,856 $ 534,682 |
Schedule of estimated aggregate annual amortization expense | Year Amount 2018 117,257 2019 61,140 2020 37,793 2021 37,793 2022 37,793 Thereafter 107,080 Total $ 398,856 |
Construction Loan Facility (Tab
Construction Loan Facility (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Construction Loan Facility | |
Schedule of principal payments | Year Amount 2018 2,305,430 2019 2,305,430 2020 2,305,430 2021 2,305,431 $ 9,221,721 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of enterprise income tax rate | Year Enterprise Income Tax Rate 2016 15% 2017 25% 2018 25% Thereafter 25% |
Schedule of provision for income taxes | Year Ended December 31, 2017 2016 Current $ - $ - Deferred 122,631 308,175 Total income tax expense $ 122,631 $ 308,175 |
Schedule of reconciliation of income taxes calculated at federal statutory rates to provision for income taxes | Years Ended December 31, 2017 2016 (Benefit) tax at statutory rate of 25% $ (4,788,734 ) $ (2,218,612 ) Effect of tax holiday - 837,089 Effect of change in tax rate from 15% to 25% - (8,094,456 ) Other, primarily the difference in U.S. tax rates 8,077 7,903 Change in valuation allowance 4,903,288 9,776,251 Income tax expense $ 122,631 $ 308,175 |
Schedule of temporary differences to deferred income tax assets and liability | December 31, 2017 2016 Deferred income tax assets: Allowance for doubtful trade receivables $ 4,552,432 $ 3,916,124 Allowance for doubtful other receivables 10,002 17,959 Inventory obsolescence reserve 1,595,671 1,535,660 Expenses not deductible in current year 1,076,126 1,008,350 Advances for intangible assets impairment 4,387,237 793,624 PRC net operating loss carry forward 14,572,439 12,660,410 U.S. net operating loss carry forward 1,076,830 1,520,675 Total deferred income tax assets 27,270,737 21,452,802 Valuation allowance (27,270,737 ) (21,452,802 ) Net deferred income tax asset $ - $ - Deferred income tax liability: Intangible assets $ 738,175 $ 572,349 |
Organization and Significant 27
Organization and Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Organization and Significant Accounting Policies (Textual) | ||
Bad debt expense | $ 1,393,576 | $ 1,086,449 |
Trade accounts receivable | 0 | 13,500,000 |
Impairment of long term assets | 14,183,969 | 3,962,141 |
Retirement benefit plans | 244,153 | 261,063 |
Long term prepaid expenses [Member] | ||
Organization and Significant Accounting Policies (Textual) | ||
Impairment of long term assets | 548,156 | |
Advances for intangible assets [Member] | ||
Organization and Significant Accounting Policies (Textual) | ||
Impairment of long term assets | $ 13,635,813 | $ 3,962,141 |
British Virgin Islands corporation [Member] | ||
Organization and Significant Accounting Policies (Textual) | ||
Equity method investment, ownership percentage | 100.00% | |
Nevada corporation [Member] | ||
Organization and Significant Accounting Policies (Textual) | ||
Equity method investment, ownership percentage | 100.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,733,679 | $ 5,962,271 |
Work in process | 481,863 | 360,550 |
Finished goods | 1,191,613 | 988,118 |
Inventory, Gross | $ 6,407,155 | $ 7,310,939 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Permit of land use | $ 432,910 | $ 405,645 |
Building | 10,052,840 | 9,419,700 |
Plant, machinery and equipment | 28,044,515 | 26,151,029 |
Motor vehicle | 330,598 | 309,777 |
Office equipment | 200,974 | 182,718 |
Total | 39,061,837 | 36,468,869 |
Less: accumulated depreciation | (15,520,834) | (11,501,421) |
Property and Equipment, net | $ 23,541,003 | $ 24,967,448 |
Property, Plant and Equipment (
Property, Plant and Equipment (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum [Member] | Permit of land use [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 40 years |
Minimum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 20 years |
Minimum [Member] | Plant, machinery and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Minimum [Member] | Motor vehicle [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Minimum [Member] | Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Maximum [Member] | Permit of land use [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 70 years |
Maximum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 49 years |
Maximum [Member] | Plant, machinery and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Maximum [Member] | Motor vehicle [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Maximum [Member] | Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Property, Plant and Equipment31
Property, Plant and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment (Textual) | ||
Depreciation expense | $ 3,125,937 | $ 2,815,167 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible assets consisted solely of CFDA approved medical formulas as follows: | ||
Gross carrying amount | $ 5,188,547 | $ 4,861,766 |
Accumulated amortization | (4,789,691) | (4,327,084) |
Net carrying amount | $ 398,856 | $ 534,682 |
Intangible Assets (Details1)
Intangible Assets (Details1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Amortization expense years | ||
2,018 | $ 117,257 | |
2,019 | 61,140 | |
2,020 | 37,793 | |
2,021 | 37,793 | |
2,022 | 37,793 | |
Thereafter | 107,080 | |
Total | $ 398,856 | $ 534,682 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets (Textual) | ||
Amortization expense relating to intangible assets | $ 165,394 | $ 262,908 |
Minimum [Member] | ||
Intangible Assets (Textual) | ||
Estimated useful life | 5 years | |
Maximum [Member] | ||
Intangible Assets (Textual) | ||
Estimated useful life | 13 years |
Advances for Purchases of Int35
Advances for Purchases of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Advances for Purchases of Intangible Assets (Textual) | ||
Obligated to pay laboratories and others | $ 1,100,000 | |
Impairment loss for advances made to laboratories | $ 14,183,969 | $ 3,962,141 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions (Textual) | ||
Other payables - related parties aggregate amount | $ 1,354,567 | $ 1,354,567 |
Advances bear interest rate | 1.00% | |
Total interest expense | $ 13,546 | $ 13,546 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Oct. 19, 2016 | Sep. 16, 2016 | Nov. 30, 2014 | Nov. 30, 2015 |
Notes Payable (Textual) | ||||
Line of credit | $ 4,500,000 | $ 4,498,169 | ||
Bear interest rate, description | Advances on the line of credit were due one year from the date of the advance and were collateralized by certain land use rights, buildings and accounts receivable and bear interest at an annual rate of 6.16% (based upon 110% of the PRC government’s short term rate of 5.6% in November 2014). | |||
Repayments of line of credit | $ 2,250,000 | $ 2,250,000 | ||
RMB [Member] | ||||
Notes Payable (Textual) | ||||
Line of credit | $ 30,000,000 | $ 30,000,000 | ||
Repayments of line of credit | $ 15,000,000 | $ 15,000,000 |
Banker's Acceptance Notes Pay38
Banker's Acceptance Notes Payable (Details) - USD ($) | 1 Months Ended | ||
Apr. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Banker's Acceptance Notes Payable (Textual) | |||
Maximum amount of agreement | $ 4,500,000 | ||
Agreement payments fees, descriptions | In addition, the agreement calls for the payment of fees equal to 0.05% of the note amount to the bank. | ||
Banker's acceptance notes payable outstanding | $ 709,796 | $ 1,088,879 | |
RMB [Member] | |||
Banker's Acceptance Notes Payable (Textual) | |||
Maximum amount of agreement | $ 30,000,000 |
Construction Loan Facility (Det
Construction Loan Facility (Details) | Dec. 31, 2017USD ($) |
Construction Loan Facility | |
2,018 | $ 2,305,430 |
2,019 | 2,305,430 |
2,020 | 2,305,430 |
2,021 | 2,305,431 |
Total principal payments | $ 9,221,721 |
Construction Loan Facility (D40
Construction Loan Facility (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Jun. 21, 2013 | |
Construction Loan Facility (Textual) | ||
Construction loan amount | $ 13,000,000 | |
Description of loan interest rates | The loan facility is for an eight-year term, which commenced on July 11, 2013, the initial draw-down date. The total loan facility is from the same bank that provided the line of credit as discussed in Note 7.  The proceeds of the loan were used for and are collateralized by the construction of the Company’s new production facility and the included production line equipment and machinery. The loan bears interest based upon 110% of the PRC government’s eight-year term rate effective on the actual draw-down date, subject to annual adjustments based on 110% of the floating rate for the same type of loan on the anniversary from the draw-down date and its subsequent anniversary dates.   On July 10, 2015, 2016 and 2017 the interest rate was adjusted to 5.94%, 5.39% and 5.73%, respectively.  The loan required interest only payments for the first two years. Beginning July 11, 2015, the balance of the principal was due in at least two (2) annual installments with the first annual payment being due within six month period after July 10, 2015 and the second annual payment being due July 10, 2016 and each following year over the next five years through July 11, 2022 on the identical terms as described above for 2015. | |
RMB [Member] | ||
Construction Loan Facility (Textual) | ||
Construction loan amount | $ 80,000,000 |
Subsidy Income (Details)
Subsidy Income (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Subsidy Income (Textual) | ||
Received cash related to subsidy from government for technological innovation | $ 340,000 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | |
2,016 | 15.00% |
2,017 | 25.00% |
2,018 | 25.00% |
Thereafter | 25.00% |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Current | ||
Deferred | 122,631 | 308,175 |
Total income tax expense | $ 122,631 | $ 308,175 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
(Benefit) tax at statutory rate of 25% | $ (4,788,734) | $ (2,218,612) |
Effect of tax holiday | 837,089 | |
Effect of change in tax rate from 15% to 25% | (8,094,456) | |
Other, primarily the difference in U.S. tax rates | 8,077 | 7,903 |
Change in valuation allowance | 4,903,288 | 9,776,251 |
Income tax expense | $ 122,631 | $ 308,175 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Allowance for doubtful trade receivables | $ 4,552,432 | $ 3,916,124 |
Allowance for doubtful other receivables | 10,002 | 17,959 |
Inventory obsolescence reserve | 1,595,671 | 1,535,660 |
Expenses not deductible in current year | 1,076,126 | 1,008,350 |
Advances for intangible assets impairment | 4,387,237 | 793,624 |
PRC net operating loss carry forward | 14,572,439 | 12,660,410 |
U.S. net operating loss carry forward | 1,076,830 | 1,520,675 |
Total deferred income tax assets | 27,270,737 | 21,452,802 |
Valuation allowance | (27,270,737) | (21,452,802) |
Net deferred income tax asset | ||
Deferred income tax liability: | ||
Intangible assets | $ 738,175 | $ 572,349 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes (Textual) | ||
Percentage of enterprise income tax | 2500.00% | |
Description of income tax rates | The Company is located in a special region, which had a 15% corporate income tax rate before the new EIT Law. The new EIT Law abolished the preferential corporate income tax rate in the special region. The Company transitioned to the new 25% tax rate over a five year period which began on January 1, 2008. During 2010, the Company applied for and received a favorable tax rate of 15% for fiscal 2011 through 2013 due to its status in the PRC as a high technology enterprise. In 2013, the Company again applied for and received the same favorable tax rate for 2014 to 2016. | |
Change in the tax expense | $ 837,089 | |
Basic and diluted earnings per share | $ (0.44) | $ (0.21) |
Net operating loss carryforwards for PRC tax | $ 58,300,000 | |
Net operating losses for United States federal income tax | $ 5,100,000 | |
Description of federal corporate income tax rate | The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment. The decrease in the United States federal corporate income tax rate from 34% to 21% for 2018 decreased the valuation allowance related to the U.S. net operating losses by approximately $667,000 at December 31, 2017. There was no liability at December 31, 2017 for the mandatory deemed repatriation tax. | |
Valuation allowance related to the U.S. net operating losses | $ 667,000 | |
Valuation allowance for deferred tax assets | $ 27,270,737 | $ 21,452,802 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stockholders' Equity (Textual) | ||
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
2010 Incentive Plan [Member] | ||
Stockholders' Equity (Textual) | ||
Common stock issued for equity awards | 4,000,000 | |
Restricted stock granted and outstanding | 175,000 |
Concentrations (Details)
Concentrations (Details) | 12 Months Ended | |
Dec. 31, 2017CustomerSuppliers | Dec. 31, 2016CustomerSuppliers | |
Concentrations (Textual) | ||
Number of customers | 0 | 0 |
Number of suppliers | Suppliers | 4 | 1 |
Sales [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 10.00% | 10.00% |
Raw Material Purchases [Member] | Suppliers 1 [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 19.80% | 21.10% |
Raw Material Purchases [Member] | Suppliers 2 [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 17.10% | |
Raw Material Purchases [Member] | Suppliers 3 [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 15.40% | |
Raw Material Purchases [Member] | Suppliers 4 [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 11.80% | |
Accounts Receivable [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 46.30% | |
Number of customers | 1 | |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 47.40% | |
Number of customers | 2 | |
Accounts Receivable [Member] | Customer Two [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 14.00% | |
Number of customers | 2 | |
Revenue 1 [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 41.00% | 49.00% |
Revenue 2 [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 17.00% | 14.00% |
Revenue 3 [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 16.00% | 11.00% |