Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 26, 2019 | Jun. 29, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CHINA PHARMA HOLDINGS, INC. | ||
Entity Central Index Key | 0001106644 | ||
Entity Trading Symbol | CPHI | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-30 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Public Float | $ 5,327,719 | ||
Entity Common Stock, Shares Outstanding | 43,579,557 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 1,186,587 | $ 2,030,214 |
Restricted cash | 1,273,940 | 709,796 |
Banker's acceptances | 20,579 | 39,867 |
Trade accounts receivable, less allowance for doubtful accounts of $17,815,075 and $18,209,734, respectively | 916,931 | 2,293,120 |
Other receivables, less allowance for doubtful accounts of $34,884 and $40,010, respectively | 170,098 | 162,981 |
Advances to suppliers | 47 | 461,307 |
Inventory | 5,054,975 | 6,407,155 |
Prepaid expenses | 123,759 | 185,647 |
Total Current Assets | 8,746,916 | 12,290,087 |
Advances for purchases of intangible assets | 17,069,587 | 23,722,954 |
Property, plant and equipment, net | 19,294,379 | 23,541,003 |
Intangible assets, net | 266,443 | 398,856 |
TOTAL ASSETS | 45,377,325 | 59,952,900 |
Current Liabilities: | ||
Trade accounts payable | 1,060,934 | 1,141,138 |
Accrued expenses | 310,804 | 276,368 |
Other payables | 3,065,508 | 2,858,701 |
Advances from customers | 525,647 | 581,132 |
Other payables - related parties | 1,633,263 | 1,354,567 |
Current portion of construction loan facility | 2,181,360 | 2,305,430 |
Bankers' acceptance notes payable | 1,273,940 | 709,796 |
Total Current Liabilities | 10,051,456 | 9,227,132 |
Non-current Liabilities: | ||
Construction loan facility | 4,362,720 | 6,916,291 |
Deferred tax liability | 764,374 | 738,175 |
Total Liabilities | 15,178,550 | 16,881,598 |
Commitments and Contingencies (Note 12) | ||
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 (deficit) earnings | (5,270,358) | 5,479,809 |
Accumulated other comprehensive income | 11,835,349 | 13,957,709 |
Total Stockholders' Equity | 30,198,775 | 43,071,302 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 45,377,325 | $ 59,952,900 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, less allowance for doubtful accounts | $ 17,815,075 | $ 18,209,734 |
Other receivables, less allowance for doubtful accounts | $ 34,884 | $ 40,010 |
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, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 12,330,687 | $ 13,212,314 |
Cost of revenue | 10,355,839 | 10,743,764 |
Gross profit | 1,974,848 | 2,468,550 |
Operating expenses: | ||
Selling expenses | 3,216,512 | 3,460,596 |
General and administrative expenses | 1,949,921 | 2,019,949 |
Research and development expenses | 172,384 | 90,474 |
Bad debt expense | 604,388 | 1,393,576 |
Impairment of long term assets | 6,479,057 | 14,183,969 |
Total operating expenses | 12,422,262 | 21,148,564 |
Loss from operations | (10,447,414) | (18,680,014) |
Other income (expense): | ||
Interest income | 38,516 | 64,414 |
Interest expense | (451,258) | (539,334) |
Net other expense | (412,742) | (474,920) |
Loss before income taxes | (10,860,156) | (19,154,934) |
Income tax benefit (expense) | 109,989 | (122,631) |
Net loss | (10,750,167) | (19,277,565) |
Other comprehensive income - foreign currency translation adjustment | (2,122,360) | 3,439,733 |
Comprehensive income (loss) | $ (12,872,527) | $ (15,837,832) |
Loss per share: | ||
Basic and diluted | $ (0.25) | $ (0.44) |
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 (deficit) | Accumulated Other Comprehensive Income | Total |
Beginning balance at Dec. 31, 2016 | $ 43,580 | $ 23,590,204 | $ 24,757,374 | $ 10,517,976 | $ 58,909,134 |
Beginning 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 | ||||
Net loss for the year | (10,750,167) | (10,750,167) | |||
Foreign currency translation adjustment | (2,122,360) | (2,122,360) | |||
Ending balance at Dec. 31, 2018 | $ 43,580 | $ 23,590,204 | $ (5,270,358) | $ 11,835,349 | $ 30,198,775 |
Ending balance, shares at Dec. 31, 2018 | 43,579,557 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (10,750,167) | $ (19,277,565) |
Depreciation and amortization | 3,258,739 | 3,291,330 |
Inventory write off | 954,311 | 118,003 |
Bad debt expense | 604,388 | 1,393,576 |
Deferred income taxes | 68,419 | 122,631 |
Impairment of long term assets | 6,479,057 | 14,183,969 |
Changes in assets and liabilities: | ||
Trade accounts and other receivables | 99,400 | 51,024 |
Advances to suppliers | (449,101) | 1,614,958 |
Inventory | 688,852 | 1,718,336 |
Trade accounts payable | (16,441) | (2,045,948) |
Accrued taxes payable | (147,099) | 18,753 |
Other payables and accrued expenses | 437,901 | 420,523 |
Advances from customers | (25,127) | (274,068) |
Prepaid expenses | 53,860 | (494,306) |
Net Cash Provided by Operating Activities | 1,256,992 | 841,216 |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (51,145) | (136,479) |
Net Cash Used in Investing Activities | (51,145) | (136,479) |
Cash Flows from Financing Activities: | ||
Payments of construction term loan | (2,263,877) | (1,479,944) |
Advances from related party | 287,423 | |
Net Cash Used in Financing Activities | (1,976,454) | (1,479,944) |
Effect of Exchange Rate Changes on Cash | (73,020) | 139,619 |
Net Decrease in Cash and Cash Equivalents | (843,627) | (635,588) |
Cash and Cash Equivalents at Beginning of Period | 2,030,214 | 2,665,802 |
Cash and Cash Equivalents at End of Period | 1,186,587 | 2,030,214 |
Supplemental Cash Flow Information: | ||
Cash paid for income taxes | ||
Cash paid for interest | 588,191 | 525,788 |
Supplemental Noncash Investing and Financing Activities: | ||
Issuance of banker's acceptances | 625,128 | 709,796 |
Accounts receivable collected with banker's acceptances | 579,896 | 531,294 |
Inventory purchased with banker's acceptances | $ 597,686 | $ 492,906 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
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. Helpson received 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 against the allowance for the years ended December 31, 2018 and 2017, 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 The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon buyer’s designated carrier or the buyer picks up the goods at our warehouse. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adoption rules. Cost of Revenues Research and Development Basic and Diluted Loss per Common Share There were no potentially dilutive common shares outstanding during the years ended December 31, 2018 and 2017, 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 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 Recently Issued Pronouncements In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through 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 upon adoption. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 2 – INVENTORY Inventory consisted of the following: December 31, December 31, Raw materials $ 3,148,990 $ 4,733,679 Work in process 493,768 481,863 Finished goods 1,412,217 1,191,613 Total Inventory $ 5,054,975 $ 6,407,155 The Company wrote off obsolete inventory totaling $954,311 and $118,003 for the years ending December 31, 2018 and 2017, respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 3 – PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: December 31, 2018 December 31, 2017 Permit of land use $ 409,612 $ 432,910 Building 9,511,832 10,052,840 Plant, machinery and equipment 26,576,409 28,044,515 Motor vehicle 312,807 330,598 Office equipment 198,292 200,974 Total 37,008,952 39,061,837 Less: accumulated depreciation (17,714,573 ) (15,520,834 ) Property, plant and equipment, net $ 19,294,379 $ 23,541,003 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, 2018 and 2017, depreciation expense was $3,143,596 and $3,125,937, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
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 China Food and Drug Administration (“CFDA”). The Company did not obtain CFDA production approval for any medical formulas during the years ended December 31, 2018 and 2017, and no costs were reclassified from advances to intangible assets during the years ended December 31, 2018 and 2017, respectively. Approved medical formulas are amortized from the date CFDA approval is obtained over their individually identifiable estimated useful lives, 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 $115,143 and $165,394, respectively for the years ended December 31, 2018 and 2017, 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. The Company evaluates each approved medical formula for impairment at the date of CFDA approval, when indications of impairment are present and also at the date of each financial statement. The Company’s evaluation is based on an estimated undiscounted net cash flow model, which considers currently available market data for the related drug and the Company’s estimated market share. If the carrying value of the medical formula exceeds the estimated future net cash flows, an impairment loss is recognized for the excess of the carrying value over the fair value of the medical formula, which is determined by the estimated discounted future net cash flows. No impairment loss was recognized during the years ended December 31, 2018 and 2017. Intangible assets consisted solely of CFDA approved medical formulas as follows: December 31, December 31, 2018 2017 Gross carrying amount $ 4,909,318 $ 5,188,547 Accumulated amortization (4,642,875 ) (4,789,691 ) Net carrying amount $ 266,443 $ 398,856 The estimated aggregate annual amortization expense for each of the next five years and thereafter is as follows: Year Amount 2019 60,038 2020 37,112 2021 37,112 2022 37,112 2023 37,112 Thereafter 57,957 Total $ 266,443 |
Advances for Purchases of Intan
Advances for Purchases of Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
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 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 was 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 ended December 31, 2013. These patents are 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. In order to promote the standard of the pharmaceutical industry in China in line with international standards, significant changes have taken place in the policies and regulations in this industry in recent years. A series of policies on consistency evaluation and drug review process have been issued, and more potential reforms and adjustments are underway. In this context, the Company believes that the uncertainties in the timetables for obtaining CFDA production approvals for products under research are increasing. Under the new regulations and policy environment, the criteria for formulations’ development are more stringent. The Company must supplement and improve the corresponding processes and standards to meet the latest requirements of CFDA in accordance with the requirements of consistency evaluation. As a result, the Company anticipates an extended timeline on the approval process of our current pipeline products. 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, 2018, the Company was obligated to pay laboratories and others approximately $0.30 million upon the completion of various phases of contracts to obtain CFDA production approval of medical formulas. During the year ended December 31, 2018, 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 two formulas to two laboratories were impaired. In 2017, four formulas to three of the 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, 2018 and 2017 in the amount of $6,134,271 and $13,635,813, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS A member of the Company's board of directors ("Board") had previously advanced the Company an aggregate amount of $1,354,567 as of December 31, 2018 and 2017, which is 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 for each of the years ended December 31, 2018 and 2017 was $13,546. During 2018, the Company received advances totaling $278,696 from our Chairperson, Chief Executive Officer and Interim Chief Financial Officer. This amount is recorded as Other payables – related parties on the accompanying consolidated balance sheets as of December 31, 2018. An aggregate of $87,254 was repaid in January 2019. Compensation payable to our Chairperson, Chief Executive Officer and Interim Chief Financial Officer is included in Other payables in the accompanying consolidated balance sheet totaling $2,051,186 and $1,815,186 as of December 31, 2018 and 2017, respectively. |
Banker's Acceptance Notes Payab
Banker's Acceptance Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Banking and Thrift [Abstract] | |
BANKER'S ACCEPTANCE NOTES PAYABLE | NOTE 7 – BANKER'S ACCEPTANCE NOTES PAYABLE In March 2017 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 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 acceptance notes issued to the third parties. The amount of these deposited balances is shown as "Restricted cash" on the accompanying balance sheets as of December 31, 2018 and 2017. The maximum amount that the Company can issue under this agreement is limited to the lesser of RMB30,000,000 (approximately $4.5 million) or the amount of cash available to deposit against the banker's acceptance notes. In addition, the agreement calls for the payment of fees equal to 0.05% of the note amount to the bank. As of December 31, 2018 and 2017, the Company had outstanding banker's acceptance notes in the amount of $1,273,940 and $709,796, respectively. |
Construction Loan Facility
Construction Loan Facility | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONSTRUCTION LOAN FACILITY | NOTE 8 – CONSTRUCTION LOAN FACILITY The Company obtained a construction loan facility, dated June 21, 2013, in the aggregate amount of RMB 80,000,000 (approximately $13 million). The loan facility is for an eight-year term, which commenced on July 11, 2013, the initial draw-down date. 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, 2016, 2017 and 2018 the interest rate was adjusted to 5.39%, 5.39% and 5.39%, 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 the 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. The Company has made all required payments due under the loan. As of December 31, 2018, the Company had no additional amounts available to it under this facility. During the year ended December 31, 2018, the Company made principal payments in the amount of $2,030,214 (RMB 15,000,000). Principal payments required for the remaining term of the loan facility as of December 31, 2018 are as follows: Year Amount 2019 2,181,360 2020 2,181,360 2021 2,181,360 $ 6,544,080 Fair Value of Construction Loan Facility |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9 - 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 of a change in tax laws or rates on deferred tax assets and liabilities 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 returns 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, 2018, the Company has not identified any uncertain tax positions that it has taken. U.S. income tax returns for the years ended December 31, 2015 through December 31, 2018 and the Chinese income tax return for the year ended December 31, 2018 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 enterprise income tax rate of 25%. The provision for income taxes consisted of the following: Years Ended December 31, 2018 2017 Current $ (178,408 ) $ - Deferred 68,419 122,631 Total income tax expense $ (109,989 ) $ 122,631 Following is a reconciliation of income taxes calculated at the federal statutory rates to the provision for income taxes: Years Ended December 31, 2018 2017 (Benefit) tax at statutory rate of 25% $ (2,715,040 ) $ (4,788,734 ) Prior year refund received (178,408 ) - Other, primarily the difference in U.S. tax rates 7,881 8,077 Change in valuation allowance 2,775,578 4,903,288 Income tax (benefit) expense $ (109,989 ) $ 122,631 The temporary differences which give rise to the deferred income tax assets and liability are as follows: December 31, 2018 2017 Deferred income tax assets: Allowance for doubtful trade receivables $ 4,453,769 $ 4,552,432 Allowance for doubtful other receivables 8,721 10,002 Inventory obsolescence reserve 1,487,087 1,595,671 Expenses not deductible in current year 1,101,268 1,076,126 Advances for intangible assets impairment 5,628,803 4,387,237 PRC net operating loss carry forward 13,124,191 14,572,439 U.S. net operating loss carry forward 1,187,112 1,076,830 Total deferred income tax assets 26,990,951 27,270,737 Valuation allowance (26,990,951 ) (27,270,737 ) Net deferred income tax asset $ - $ - Deferred income tax liability: Intangible assets $ 764,374 $ 738,175 As of December 31, 2018, the Company had net operating loss carryforwards for PRC tax purposes of approximately $52.5 million, which are available to offset any future taxable income through 2023. Approximately $6.1 million of these carryforwards expired in 2018. Approximately $3.9 million of the remaining carryforwards will expire in 2019. During 2018, the Company received a refund related to its 2013 PRC tax return in the amount of $178,408. The Company also has net operating losses for United States federal income tax purposes of approximately $5.7 million which are available to offset future taxable income, if any, through 2038. 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, 2018 and 2017 for the mandatory deemed repatriation tax. In assessing the likelihood of realization 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, 2018 and 2017. Therefore, the Company provided for a valuation allowance against its deferred tax assets of $26,990,951 and $27,270,737 as of December 31, 2018 and 2017, respectively. The Company also incurred 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. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 10 – FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, a hierarchy has been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; and Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The Company uses fair value to measure the value of the banker’s acceptance notes it holds. The banker’s acceptance notes are recorded at cost which approximates fair value. The Company held the following assets and liabilities recorded at fair value: Fair Value Measurements at Description December 31, 2018 Level 1 Level 2 Level 3 Banker’s acceptance notes $ 20,579 $ - $ 20,579 $ - Total $ 20,579 $ - $ 20,579 $ - Fair Value Measurements at Reporting Date Using Description December 31, 2017 Level 1 Level 2 Level 3 Banker’s acceptance notes $ 39,867 $ - $ 39,867 $ - Total $ 39,867 $ - $ 39,867 $ - |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 11 - 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. 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, 2018, there were 175,000 shares of restricted stock granted and outstanding under the Plan. No options were outstanding as of December 31, 2018 under the Plan. There were no securities issued from the Plan during each of the years ended December 31, 2018 and 2017. 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, 2018 and 2017. 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, 2018, 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, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 – 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, 2018 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 13 – CONCENTRATIONS For the year ended December 31, 2018, no customer accounted for more than 10% of sales and two customers accounted for 49.1% and 10.6% of accounts receivable. Three suppliers accounted for 26.2%, 17.0% and 11.2% of raw material purchases, and three different products accounted for 33%, 20% and 18% of revenue. 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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS In accordance with ASC 855-10 the Management reviewed the Company's operations subsequent to December 31, 2018 to the date these consolidated financial statements were issued, and has determined the Company does not have any material subsequent events to disclose in these consolidated financial statements. |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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. Helpson received 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 against the allowance for the years ended December 31, 2018 and 2017, 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 The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon buyer's designated carrier or the buyer picks up the goods at our warehouse. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adoption rules. |
Cost of Revenues | Cost of Revenues |
Research and Development | Research and Development |
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, 2018 and 2017, 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 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 Recently Issued Pronouncements In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through 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 upon adoption. |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | December 31, December 31, Raw materials $ 3,148,990 $ 4,733,679 Work in process 493,768 481,863 Finished goods 1,412,217 1,191,613 Total Inventory $ 5,054,975 $ 6,407,155 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | December 31, 2018 December 31, 2017 Permit of land use $ 409,612 $ 432,910 Building 9,511,832 10,052,840 Plant, machinery and equipment 26,576,409 28,044,515 Motor vehicle 312,807 330,598 Office equipment 198,292 200,974 Total 37,008,952 39,061,837 Less: accumulated depreciation (17,714,573 ) (15,520,834 ) Property, plant and equipment, net $ 19,294,379 $ 23,541,003 |
Schedule 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, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | December 31, December 31, 2018 2017 Gross carrying amount $ 4,909,318 $ 5,188,547 Accumulated amortization (4,642,875 ) (4,789,691 ) Net carrying amount $ 266,443 $ 398,856 |
Schedule of estimated aggregate annual amortization expense | Year Amount 2019 60,038 2020 37,112 2021 37,112 2022 37,112 2023 37,112 Thereafter 57,957 Total $ 266,443 |
Construction Loan Facility (Tab
Construction Loan Facility (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of principal payments | Year Amount 2019 2,181,360 2020 2,181,360 2021 2,181,360 $ 6,544,080 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | Years Ended December 31, 2018 2017 Current $ (178,408 ) $ - Deferred 68,419 122,631 Total income tax expense $ (109,989 ) $ 122,631 |
Schedule of reconciliation of income taxes calculated at federal statutory rates to provision for income taxes | Years Ended December 31, 2018 2017 (Benefit) tax at statutory rate of 25% $ (2,715,040 ) $ (4,788,734 ) Prior year refund received (178,408 ) - Other, primarily the difference in U.S. tax rates 7,881 8,077 Change in valuation allowance 2,775,578 4,903,288 Income tax (benefit) expense $ (109,989 ) $ 122,631 |
Schedule of temporary differences to deferred income tax assets and liability | December 31, 2018 2017 Deferred income tax assets: Allowance for doubtful trade receivables $ 4,453,769 $ 4,552,432 Allowance for doubtful other receivables 8,721 10,002 Inventory obsolescence reserve 1,487,087 1,595,671 Expenses not deductible in current year 1,101,268 1,076,126 Advances for intangible assets impairment 5,628,803 4,387,237 PRC net operating loss carry forward 13,124,191 14,572,439 U.S. net operating loss carry forward 1,187,112 1,076,830 Total deferred income tax assets 26,990,951 27,270,737 Valuation allowance (26,990,951 ) (27,270,737 ) Net deferred income tax asset $ - $ - Deferred income tax liability: Intangible assets $ 764,374 $ 738,175 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities recorded at fair value | Fair Value Measurements at Description December 31, 2018 Level 1 Level 2 Level 3 Banker’s acceptance notes $ 20,579 $ - $ 20,579 $ - Total $ 20,579 $ - $ 20,579 $ - Fair Value Measurements at Reporting Date Using Description December 31, 2017 Level 1 Level 2 Level 3 Banker’s acceptance notes $ 39,867 $ - $ 39,867 $ - Total $ 39,867 $ - $ 39,867 $ - |
Organization and Significant _3
Organization and Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Organization and Significant Accounting Policies (Textual) | ||
Bad debt expense | $ 604,388 | $ 1,393,576 |
Trade accounts receivable | 0 | 0 |
Advances for purchases of intangible assets | 6,479,057 | 14,183,969 |
Lease assets and liabilities | 200,000 | |
Advances for intangible assets [Member] | ||
Organization and Significant Accounting Policies (Textual) | ||
Advances for purchases of intangible assets | 6,134,271 | 13,635,813 |
Prepaid Expenses [Member] | ||
Organization and Significant Accounting Policies (Textual) | ||
Advances for purchases of intangible assets | $ 548,156 | |
Advances to suppliers [Member] | ||
Organization and Significant Accounting Policies (Textual) | ||
Advances for purchases of intangible assets | $ 344,786 | |
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, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,148,990 | $ 4,733,679 |
Work in process | 493,768 | 481,863 |
Finished goods | 1,412,217 | 1,191,613 |
Total Inventory | $ 5,054,975 | $ 6,407,155 |
Inventory (Details Textual)
Inventory (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Inventory (Textual) | ||
Wrote off obsolete inventory | $ 954,311 | $ 118,003 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Permit of land use | $ 409,612 | $ 432,910 |
Building | 9,511,832 | 10,052,840 |
Plant, machinery and equipment | 26,576,409 | 28,044,515 |
Motor vehicle | 312,807 | 330,598 |
Office equipment | 198,292 | 200,974 |
Total | 37,008,952 | 39,061,837 |
Less: accumulated depreciation | (17,714,573) | (15,520,834) |
Property, plant and equipment, net | $ 19,294,379 | $ 23,541,003 |
Property, Plant and Equipment_3
Property, Plant and Equipment (Details 1) | 12 Months Ended |
Dec. 31, 2018 | |
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 Equipment_4
Property, Plant and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment (Textual) | ||
Depreciation expense | $ 3,143,596 | $ 3,125,937 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Intangible assets consisted solely of CFDA approved medical formulas as follows: | ||
Gross carrying amount | $ 4,909,318 | $ 5,188,547 |
Accumulated amortization | (4,642,875) | (4,789,691) |
Net carrying amount | $ 266,443 | $ 398,856 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Amortization expense years | ||
2019 | $ 60,038 | |
2020 | 37,112 | |
2021 | 37,112 | |
2022 | 37,112 | |
2023 | 37,112 | |
Thereafter | 57,957 | |
Total | $ 266,443 | $ 398,856 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible Assets (Textual) | ||
Amortization expense relating to intangible assets | $ 115,143 | $ 165,394 |
Advances for Purchases of Int_2
Advances for Purchases of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Advances for Purchases of Intangible Assets (Textual) | ||
Laboratories and others | $ 300,000 | |
Impairment loss for advances made to laboratories | $ 6,134,271 | $ 13,635,813 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions (Textual) | ||
Interest rate | 1.00% | |
Interest expense | $ 13,546 | $ 13,546 |
Other payables - related parties aggregate amount | 1,354,567 | 1,354,567 |
Other payables | 2,051,186 | $ 1,815,186 |
Management [Member] | ||
Related Party Transactions (Textual) | ||
Other payables - related parties aggregate amount | 278,696 | |
Compensation payable | $ 87,254 |
Banker's Acceptance Notes Pay_2
Banker's Acceptance Notes Payable (Details) - USD ($) | 1 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Banker's Acceptance Notes Payable (Textual) | |||
Maximum amount of agreement | $ 4,500,000 | ||
Agreement payments fees, description | 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 | $ 1,273,940 | $ 709,796 | |
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, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 2,181,360 |
2020 | 2,181,360 |
2021 | 2,181,360 |
Total | $ 6,544,080 |
Construction Loan Facility (D_2
Construction Loan Facility (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | 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 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, 2016, 2017 and 2018 the interest rate was adjusted to 5.39%, 5.39% and 5.39%, 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 the 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. | |
Principal amount | $ 2,030,214 | |
RMB [Member] | ||
Construction Loan Facility (Textual) | ||
Construction loan amount | $ 80,000,000 | |
Principal amount | $ 15,000,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Current | $ (178,408) | |
Deferred | 68,419 | 122,631 |
Total income tax expense | $ (109,989) | $ 122,631 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
(Benefit) tax at statutory rate of 25% | $ (2,715,040) | $ (4,788,734) |
Prior year refund received | (178,408) | |
Other, primarily the difference in U.S. tax rates | 7,881 | 8,077 |
Change in valuation allowance | 2,775,578 | 4,903,288 |
Income tax (benefit) expense | $ (109,989) | $ 122,631 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Allowance for doubtful trade receivables | $ 4,453,769 | $ 4,552,432 |
Allowance for doubtful other receivables | 8,721 | 10,002 |
Inventory obsolescence reserve | 1,487,087 | 1,595,671 |
Expenses not deductible in current year | 1,101,268 | 1,076,126 |
Advances for intangible assets impairment | 5,628,803 | 4,387,237 |
PRC net operating loss carry forward | 13,124,191 | 14,572,439 |
U.S. net operating loss carry forward | 1,187,112 | 1,076,830 |
Total deferred income tax assets | 26,990,951 | 27,270,737 |
Valuation allowance | (26,990,951) | (27,270,737) |
Net deferred income tax asset | ||
Deferred income tax liability: | ||
Intangible assets | $ 764,374 | $ 738,175 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes (Textual) | ||
Net operating loss carryforwards for PRC tax | $ 52,500,000 | |
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. | |
Operating loss, expiration date | Dec. 31, 2023 | |
Net operating losses for United States federal income tax | $ 5,700,000 | |
Valuation allowance for deferred tax assets | $ 26,990,951 | $ 27,270,737 |
Income tax transitioned and received a favorable tax rate | 25.00% | |
Net operating loss carryforwards | $ 1,187,112 | $ 1,076,830 |
Company received refund related to 2013 PRC tax return amount | $ 178,408 | |
Net operating loss expiration, description | Approximately $6.1 million of these carryforwards expired in 2018. Approximately $3.9 million of the remaining carryforwards will expire in 2019. | |
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 $667,000 at December 31, 2017. There was no liability at December 31, 2018 and 2017 for the mandatory deemed repatriation tax. |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | $ 20,579 | $ 39,867 |
Total | 20,579 | 39,867 |
Fair Value, Inputs, Level 1 [Member] | ||
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | ||
Total | ||
Fair Value, Inputs, Level 2 [Member] | ||
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | 20,579 | 39,867 |
Total | 20,579 | 39,867 |
Fair Value, Inputs, Level 3 [Member] | ||
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | ||
Total |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
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 |
Two Thousand Ten 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, 2018CustomerSuppliers / Number | Dec. 31, 2017CustomerSuppliers / Number | |
Sales Revenue, Net [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 10.00% | 10.00% |
Number of customers | 0 | 0 |
Accounts Receivable [Member] | ||
Concentrations (Textual) | ||
Number of customers | 2 | 2 |
Raw Material Purchases [Member] | ||
Concentrations (Textual) | ||
Number of suppliers | Suppliers / Number | 3 | 4 |
Revenue one [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 33.00% | 41.00% |
Revenue two [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 20.00% | 17.00% |
Revenue three [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 18.00% | 16.00% |
Customer [Member] | Accounts Receivable [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 49.10% | 47.40% |
Customer [Member] | Raw Material Purchases [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 26.20% | 19.80% |
Customer One [Member] | Accounts Receivable [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 10.60% | 14.00% |
Customer One [Member] | Raw Material Purchases [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 17.00% | 17.10% |
Customer Two [Member] | Raw Material Purchases [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 11.20% | 15.40% |
Customer Three [Member] | Raw Material Purchases [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 11.80% |