Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Mar. 14, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | KIWA BIO-TECH PRODUCTS GROUP CORP | |
Entity Central Index Key | 0001159275 | |
Document Type | 10-Q/A | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | true | |
Amendment Description | On October 17, 2017, Kiwa Bio-Tech Products Group Corporation (the "Company") filed a Current Report on Form 8-K with the Securities and Exchange Commission stating that it had concluded that the Company's previously issued consolidated financial statements for the year ended December 31, 2016 included in the Company'sAnnual Report on Form 10-K for the year then ended should not be relied upon and that the Company would file with the Securities and Exchange Commission amendments to the aforementioned Annual Report and affected Quarterly Reports to restate the financial statements included therein. Following a re-audit of the Company's Annual Financial Statement by Friedman LLP, the Company's new independent registered public accounting firm, on November 22, 2017 the Company filed an amended Annual Report on Form 10-K with the Securities and Exchange Commission for the year ended December 31, 2016. That Amended Annual Report incorporated restated financial statements which properly accounted for all matters which were the subject of the prior conclusion that the Annual Report should no longer be relied upon. Such restatements resolved all issues which were the basis of the Company's prior advice that the originally filed Annual Report should no longer be relied upon. While the financial statements for the period ended June 30, 2017 were previously restated in the Company's Form 10-Q for the quarter ended June 30, 2018 (see Note 2 to that filing for details), this Amended Form 10-Q for the quarter ended June 30, 2017 is being filed to update the previously filed report for that period in order to be consistent with the Company's subsequent filings. Specifically, this Amended 10-Q is being filed in order to restate: a) Revenue and cost of goods sold were deferred as the Company considers the revenue recognition criteria are not met as of June 30, 2017 and therefore defers the revenue and cost of goods sold until payments were collected; b) Recognition of the relative fair value of beneficial conversion feature ("BCF") into additional paid in capital and debt discount and amortize value over the term of the convertible notes issued on January 17, 2017;Recognition of derivative liability from conversion feature of convertible note into debt discount and amortize value over the term of the convertible notes issued on May 9, 2017; c) Reclassification of the balance due from Kangtan Gerui (Beijing) Bio-Tech Co, Ltd ("Gerui"), which Ms. Feng Li, a member of the Company's board of directors and shareholder of the Company (Ms. Li held approximately 12.93% of the Company's Common Stock and 50% of the Company's Series A Preferred Stock), is also a 23% shareholder of Gerui, from other receivables - third party to other receivables - related party as of June 30, 2017 and December 31, 2016, respectively; d) Reclassification of Kiwa Shandong as discontinued operations. The Company executed an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. ("Transferee") on February 11, 2017 whereby the Company transferred all of its right, title and interest in Kiwa Bio-Tech Products (Shandong) Co., Ltd. ("Shandong") to the Transferee for the RMB 1.00. The government approval and processing of the transaction was completed on April 12, 2017. This transaction was considered as completed and effective on April 12, 2017. This amendment of the Company's financial statements for the period ended June 30, 2017 results in the statements for this period being consistent with the Company's financial statements for the Quarter ended September 30, 2017 and thereafter. The Company's amended Quarterly Reports on Form 10-Q for the Quarters ended June 30, 2017 and March 31, 2017 (filed concurrently herewith) and the restated financial statements included therein properly account for all matters which were the subject of the prior conclusion that the financial statements included in the Company's Quarterly Reports on Form 10-Q for those quarters should no longer be relied upon. Such restatements have resolved all issues which were the basis of the Company's prior advice with respect to reliance on such financials statements. As a result thereof, the Company's board of directors has concluded that all of the Company's currently issued consolidated financial statements, including but not limited to the Company's First Amendment to Form 10-Q for the three months ended June 30, 2017 may be relied upon and that the full review of the Company's financial statements for all periods which was the basis of the Company's prior non-reliance guidance have been successfully completed. | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 16,885,260 | |
Trading Symbol | KWBT | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 71,554 | $ 13,469 |
Accounts receivable, net | 9,425,359 | 1,122,754 |
Prepaid expenses | 1,198,513 | 1,417,554 |
Rent deposit and other receivable | 160,399 | 38,897 |
Due from related party | 1,350,193 | |
Advance to suppliers | 1,255,218 | 1,880,044 |
Deferred cost of goods sold | 6,116,829 | |
Total current assets | 19,578,065 | 4,472,718 |
OTHER ASSETS | ||
Property, plant and equipment, net | 41,696 | 55,319 |
Deferred tax assets | 707,720 | |
Due from related party | 1,522,434 | |
Other long-term assets | 181,330 | 34,519 |
Total non-current assets | 930,746 | 1,612,272 |
Total assets | 20,508,811 | 6,084,990 |
Current liabilities | ||
Accounts payable | 4,703,661 | 1,073,094 |
Due to related parties | 83,798 | 261,259 |
Derivative liabilities | 576,345 | |
Convertible notes payable, net of discount | 272,965 | 150,250 |
Notes payable | 360,000 | 360,000 |
Interest payable | 1,649,102 | 1,524,988 |
Salary payable | 1,225,869 | 1,154,921 |
Taxes payable | 615,434 | 414,970 |
Deferred Revenue | 8,947,707 | |
Other payables and accruals | 1,116,574 | 924,875 |
Current liabilities of discontinued operations | 4,464,685 | |
Total current liabilities | 19,551,455 | 10,329,042 |
Convertible note payable - non-current | 282,412 | |
Total liabilities | 19,833,867 | 10,329,042 |
SHAREHOLDER'S EQUITY(DEFICIENCY) | ||
Preferred stock - $0.001 par value, Authorized 20,000,000 shares. Issued and outstanding 500,000 and 500,000 shares at June 30, 2017 and December 31, 2016, respectively. | 500 | 500 |
Common stock - $0.001 per value. Authorized 100,000,000 shares. Issued and outstanding $10,028,219 and 8,728,981 shares at June 30, 2017 and December 31, 2016, respectively | 10,028 | 8,729 |
Additional paid-in capital | 16,904,321 | 15,234,878 |
Statutory Reserve | 127,473 | 127,473 |
Accumulated deficit | (16,356,419) | (19,561,255) |
Accumulated other comprehensive gain (loss) | (10,959) | (54,377) |
Total stockholders' equity (deficiency) | 674,944 | (4,244,052) |
Total liabilities and shareholder's equity | $ 20,508,811 | $ 6,084,990 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred Stock, shares issued | 500,000 | 500,000 |
Preferred Stock, shares outstanding | 500,000 | 500,000 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 10,028,219 | 8,728,981 |
Common Stock, shares outstanding | 10,028,219 | 8,728,981 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue | ||||
Cost of goods sold | ||||
Gross Profit | ||||
Operating expenses | ||||
Selling expense | 54,232 | 90,485 | ||
Research and development | 36,433 | 36,488 | 72,724 | 75,252 |
General and administrative | 625,275 | 123,784 | 1,033,437 | 194,565 |
Total operating expenses | 715,940 | 160,272 | 1,196,646 | 269,817 |
Operating loss | (715,940) | (160,272) | (1,196,646) | (269,817) |
Other income/(expense), net | ||||
License revenue | 443,085 | 710,095 | ||
Change in fair value of derivative liabilities | (6,561) | (6,561) | ||
Interest expense | (125,341) | (47,547) | (187,131) | (94,551) |
Other income/(expense) | 800 | 800 | ||
Exchange gain (loss) | (16,903) | (17,075) | ||
Total other income/(expense), net | (148,005) | 395,538 | (209,967) | 615,544 |
Income (loss) from continuing operations before income taxes | (863,945) | 235,266 | (1,406,613) | 345,727 |
(Provision) benefit for income taxes | ||||
Current | (379,973) | (599,022) | ||
Deferred | 427,798 | 698,243 | ||
Total (provision) benefit for income taxes | 47,825 | 99,221 | ||
Income (loss) from continuing operations | (816,120) | 235,266 | (1,307,392) | 345,727 |
Income from discontinued operations, net of taxes | 4,511,384 | (53,291) | 4,512,182 | (107,622) |
Net income | 3,695,264 | 181,975 | 3,204,790 | 238,105 |
Other comprehensive income | ||||
Foreign currency translation adjustment | 78,689 | 129,198 | 43,418 | 94,105 |
Total comprehensive income | $ 3,773,953 | $ 311,173 | $ 3,248,208 | $ 332,210 |
Earnings per share - Basic: | ||||
Income (Loss) from continuing operations | $ (0.08) | $ 0.09 | $ (0.14) | $ 0.09 |
Discontinued operations | 0.46 | (0.02) | 0.48 | (0.03) |
Net Income (loss) | 0.38 | 0.07 | 0.34 | 0.06 |
Earnings per share - Diluted: | ||||
Income (Loss) from continuing operations | (0.08) | 0.07 | (0.14) | 0.06 |
Discontinued operations | 0.46 | (0.02) | 0.48 | (0.02) |
Net Income (loss) | $ 0.38 | $ 0.05 | $ 0.34 | $ 0.05 |
Weighted average number of common shares outstanding - basic | 9,823,223 | 2,617,584 | 9,450,561 | 3,766,705 |
Weighted average number of common shares outstanding - diluted | 9,823,223 | 3,550,696 | 9,450,561 | 5,623,035 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 3,204,790 | $ 238,105 |
Loss (Income) from discontinued operations, net of taxes | (4,512,182) | 107,622 |
Net income (loss) from continuing operations | (1,307,392) | 345,727 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation | 17,787 | 2,036 |
Accrued interest | 186,649 | 94,551 |
Stock compensation consulting expense | 310,506 | |
Employee benefits | 102,743 | |
(Gain) loss on derivative liabilities | 6,561 | |
Deferred income tax | (698,243) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (8,164,649) | (54,940) |
Rent deposit and other receivables | (117,586) | (1,210,196) |
Due from related party | 206,253 | 76,516 |
Advance to suppliers | 660,523 | |
Prepaid expenses | (48,374) | |
Deferred cost of goods sold | (6,034,924) | |
Accounts payable | 3,556,354 | 49,999 |
Advance from customers | (13,018) | |
Salary payable | 70,383 | 78,080 |
Taxes payable | 187,896 | |
Other payable and accruals | (83,312) | 469,297 |
Deferred revenue | 8,827,897 | |
Net cash provided by (used in) operating activities in continuing operation | (2,333,946) | (148,931) |
Net cash provided by (used in) operating activities | (2,333,946) | (148,931) |
Cash flows from investing activities: | ||
Payment of deposit for long-term investment | (145,449) | |
Purchase of property plant and equipment | (2,333) | (78,775) |
Net cash used in investing activities | (147,782) | (78,775) |
Cash flows from financing activities: | ||
Proceeds from related parties, net of payments to related parties | 17,000 | 40,500 |
Proceeds from sales of common stock | 1,481,508 | 176,000 |
Proceeds from convertible note | 955,955 | |
Net cash provided by financing activities | 2,454,463 | 216,500 |
Effect of exchange rate change | 85,350 | 22,852 |
Cash and cash equivalents: | ||
Net increase | 58,085 | 11,646 |
Balance at beginning of period | 13,469 | 721 |
Balance at end of period | 71,554 | 12,367 |
Non-cash financing activities: | ||
Issuance of common stock for debt settlement | 3,141,000 | |
Issuance of common stock for consulting service | 41,396 | |
Issuance of common stock for financing related service | 138,501 | |
Supplemental Disclosures of Cash flow Information: | ||
Cash paid for interest | ||
Cash paid for income taxes | $ 444,331 |
Description of Business and Org
Description of Business and Organization | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Organization | 1. Description of Business and Organization Organization Kiwa Bio-Tech Products Group Corporation (“the Company”) is the result of a share exchange transaction accomplished on March 12, 2004 between the shareholders of Kiwa Bio-Tech Products Group Ltd. (“Kiwa BVI”), a company originally organized under the laws of the British Virgin Islands on June 5, 2002 and Tintic Gold Mining Company (“Tintic”), a corporation originally incorporated in the state of Utah on June 14, 1933 to perform mining operations in Utah. The share exchange resulted in a change of control of Tintic, with former Kiwa BVI stockholders owning approximately 89% of Tintic on a fully diluted basis and Kiwa BVI surviving as a wholly-owned subsidiary of Tintic. Subsequent to the share exchange transaction, Tintic changed its name to Kiwa Bio-Tech Products Group Corporation. On July 21, 2004, the Company completed its reincorporation in the State of Delaware. On March 8, 2017, we completed our reincorporation in the State of Nevada. The Company operates through a series of subsidiaries in the Peoples Republic of China as detailed in the following Organizational Chart. The Company had previously operated its business through its subsidiaries Kiwa Bio-Tech Products (Shandong) Co., Ltd. (“Kiwa Shandong”) and Tianjin Kiwa Feed Co., Ltd. (“Kiwa Tianjin “). Kiwa Tianjin has been dissolved since July 11, 2012. On February 11, 2017, the Company entered an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) to transfer all of shareholders’ right, title and interest in Kiwa Shandong to the Transferee for USD $1.00. On April 12, 2017, the government processing of transfer has been completed. Business The Company’s business plan is to develop and market innovative, manufacture, distribute cost-effective and environmentally safe bio-technological products for agriculture markets primarily in China. The Company has acquired technologies to produce and market bio-fertilizer. |
Summaries of Significant Accoun
Summaries of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summaries of Significant Accounting Policies | 2. Summaries of Significant Accounting Policies Principle of Consolidation These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries, Kiwa BVI, Hong Kong Baina Group Holding Company, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd (“Kiwa Beijing”), Kiwa Bio-Tech Products (Shenzhen) Co., Ltd and Kiwa Bio-Tech Products (Hebei) Co., Ltd. All significant inter-company balances or transactions are eliminated on consolidation. Reverse Split On January 14, 2016, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the State of Delaware with reference to a 1-for-200 reverse stock split with respect to its Common Stock with effective date of January 28, 2016. In connection with the reverse split, the Company’s authorized capital was amended to be 120,000,000 shares, comprising 100,000,000 shares of Common Stock par value $0.001 and 20,000,000 shares of Preferred Stock par value $0.001. All relevant information relating to numbers of shares, options and per share information have been retrospectively adjusted to reflect the reverse stock split for all periods presented. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates include the valuation of securities issued, deferred tax assets and related valuation allowance. Certain of our estimates, including evaluating the collectability of accounts receivable and the fair market value of long-lived assets, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates annually based on these conditions and record adjustments when necessary. Cash and Cash Equivalents Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carring amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents. Accounts Receivables Accounts receivable represent amounts due from customers in the ordinary course of business and are recorded at the invoiced amount and do not bear interest. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience, the economic environment, trends in the microbial fertilizer industry, and a review of the current status of trade accounts receivable. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. Such allowances, if any, would be recorded in the period the impairment is identified. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted.There was $55,240 allowance for doubtful accounts at June 30, 2017 and December 31, 2016. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of property, plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows: Useful Life (In years) Buildings 30 - 35 Machinery and equipment 5 - 10 Automobiles 8 Office equipment 2 - 5 Computer software 3 Leasehold improvements The shorter of the lease term and useful life Impairment of Long-Lived Assets The Company’s long-lived assets consist of property, equipment and intangible assets. The Company evaluates its investment in long-lived assets, including property and equipment, for recoverability whenever events or changes in circumstances indicate the net carrying amount may not be recoverable. Judgments regarding potential impairment are based on legal factors, market conditions and operational performance indicators, among others. In assessing the impairment of property and equipment, the Company makes assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets. Financial Instruments The Company analyzes all financial instruments with features of both liabilities and equity under FASB Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”. Embedded conversion features of convertible debentures not considered to be derivative instruments The embedded conversion features of convertible debentures not considered to be derivative instruments provide for a rate of conversion that is below market value. Such feature is normally characterized as a “beneficial conversion feature” (“BCF”). The relative fair values of the BCF were recorded as discounts from the face amount of the respective debt instrument. The Company amortized the discount using the straight-line method which approximates the effective interest method through maturity of such instruments. Embedded conversion features of convertible debentures that are classified as derivative liabilities The embedded conversion features of convertible debentures that are classified as derivative liabilities are recorded at fair value as a discount from the face amount of the respective debt instrument. The discount is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. These instruments are accounted for as derivative liabilities and marked-to-market each reporting period. The change in the value of the derivative liabilities is charged against or credited to income in the captioned “change in fair value of derivative liabilities” in the accompanying unaudited condensed consolidated statements of operations and comprehensive income. Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value with U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: ● Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. ● Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. ● Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Derivative instruments are carried at fair value, estimated using the Black Scholes Merton model. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. Revenue Recognition The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company derives its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via sales contract and invoice; and the sales price to the customer is fixed upon acceptance of the sales contract and there is no separate sales rebate, discount, or volume incentive. The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured. The Company’s customers are mainly agricultural cooperative company and distributors who then resell the Company’s products to individual farmers. Because the crop growing cycle usually takes approximately 3 to 9 months in the agricultural industry, for some co-ops and distributors, it will take approximately similar time frame of 3 to 9 months for farmers to harvest crops and to realize profits to repay them. As a result, for the sales contracts with these customers, the collectability of payment is highly dependent on the successful harvest of corps and the customers’ ability to collect money from farmers. The Company deemed the collectability of payment may not be reasonably assured until after the Company get paid. For those sales contracts that the Company has shipped its products but the payment is contingent on collections of payments from the downstream customers, the Company considers the revenue recognition criteria are not met and therefore defers the revenue and cost of goods sold until payments are collected. These revenue and cost of goods sold are classified in the captioned “Deferred revenue” and “Deferred cost of goods sold” in the accompanying unaudited condensed consolidated balance sheets. For other customers whose repayment term is within normal business course and not dependent on the harvest of corps, the Company recognized revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company. Deferred Revenue and Deferred Cost of Goods Sold Deferred revenue and deferred cost of goods sold result from transactions where the Company has shipped product for which all revenue recognition criteria have not yet been met. Deferred cost of goods sold related to deferred product revenues includes direct inventory costs. Once all revenue recognition criteria have been met, the deferred revenues and associated cost of goods sold are recognized. Income Taxes The Company accounts for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation allowance when it is more likely than not that the assets will not be recovered. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. Stock Based Compensation The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received. Foreign Currency Translation and Other Comprehensive Income The Company uses United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the functional currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of comprehensive loss and the statement of cash flow are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income. Other comprehensive income for the six months ended June 30, 2017 and 2016 represented foreign currency translation adjustments and were included in the consolidated statements of comprehensive loss. The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows: As of June 30, 2017 As of December 31, 2016 Balance sheet items, except for equity accounts 6.7832 6.9472 Six months ended June 30 2017 2016 Items in the statements of comprehensive loss 6.8753 6.5345 Earnings Per Common Share Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Related Parties The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. Cash Flows Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification. |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable, Net [Abstract] | |
Accounts Receivable, Net | 3. Accounts Receivable, net Accounts receivable, net consisted of the following: June 30, 2017 December 31, 2016 Accounts receivable $ 9,480,599 $ 1,177,994 Less: Allowance for doubtful accounts (55,240 ) (55,240 ) Accounts receivable, net $ 9,425,359 $ 1,122,754 |
Prepaid Expenses
Prepaid Expenses | 6 Months Ended |
Jun. 30, 2017 | |
Prepaid Expenses | |
Prepaid Expenses | 4. Prepaid Expenses Prepaid expenses consisted of the following: June 30, 2017 December 31, 2016 Prepaid office rent $ 28,021 $ 12,504 Prepaid government filing expense 33,588 5,000 Prepaid office expense 5,160 - Prepaid Consulting fee 1,131,744 1,400,050 $ 1,198,513 $ 1,417,554 |
Rent Deposit and Other Receivab
Rent Deposit and Other Receivable | 6 Months Ended |
Jun. 30, 2017 | |
Rent Deposit And Other Receivable | |
Rent Deposit and Other Receivable | 5. Rent Deposit and Other Receivable Rent deposit and other receivables consisted of the following: June 30, 2017 December 31, 2016 Advance to employees $ 101,103 $ 38,897 Rent deposit 39,301 - Others 19,995 - Other receivables, net $ 160,399 $ 38,897 |
Advances to Suppliers
Advances to Suppliers | 6 Months Ended |
Jun. 30, 2017 | |
Advances To Suppliers | |
Advances to Suppliers | 6. Advances to Suppliers Since currently the Company does not have manufacturing facility, it has contracted with several third parties to produce fertilizer products. Pursuant to the agreements entered by the Company and those third-party companies, the Company was required to make partially prepayments in advance of purchase or completion of productions. As of June 30, 2017 and December 31, 2016, such advance to suppliers was $ 1,255,218 and $1,880,044, respectively. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | 7. Property, Plant and Equipment, net Property, plant and equipment, net consisted of the following: June 30, 2017 December 31, 2016 Office equipment $ 3,975 $ 896 Furniture 8,028 7,838 Leasehold improvements 69,816 66,896 Total Property, plant and equipment $ 81,819 $ 75,630 Less: accumulated depreciation (40,123 ) (20,311 ) Property, plant and equipment - net $ 41,696 $ 55,319 Depreciation expense was $17,787 and $2,036 for the six months ended June 30, 2017 and 2016, and $8,318 and $2,036 for the three months ended June 30, 2017 and 2016, respectively. All of the Company’s property, plant and equipment have been held as collateral to secure the 6% Notes (see Note 14). |
Other Long-Term Assets
Other Long-Term Assets | 6 Months Ended |
Jun. 30, 2017 | |
Other Long-term Assets | |
Other Long-Term Assets | 8. Other Long-Term Assets Other long-term assets consisted of deposit for long-term investment and non-current rent deposits. On June 8, 2017, the Company entered an equity purchase agreement with Yantai Peng Hao New Materials Technology Co. Ltd., which relates to the acquisition of a new factory for purchase price of about $2.2 million (approximately RMB 15 million). The factory to be acquired by the Company will be completed in accordance with the Company’s construction plan to facilitate the production design of combining of microbial fermentation and terminal fertilizer products. Pursuant to the payment terms of purchase agreement, the Company made the first payment of $147,423 (approximately RMB 1,000,000) to Yantai Peng Hao New Materials Technology Co. Ltd. on June 30, 2017. Due to certain administrative approval process from the Chinese government, the closing of the equity purchase agreement has been delayed. RMB 6,500,000 (approximately $1.0 million) will be paid upon completion of the land use rights ownership transfer and RMB 3,500,000 (approximately $0.5 million) will be paid upon completion of the business licenses transfer. The Company estimated the completion of the transfer will be sometime in 2019. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 9. Related Party Transactions (1). Amounts due from related parties consisted of the following as of June 30, 2017 and December 31, 2016: Item Nature Notes June 30, 2017 December 31, 2016 Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”) Non-trade (a) 1,350,193 1,522,434 Total $ 1,350,193 $ 1,522,434 (a) Gerui Ms. Feng Li, a member of the Company’s board of directors and shareholder of the Company (Ms. Li held approximately 20% of the Company’s Common Stock and 50% of the Company’s Series A Preferred Stock), is also a 23% shareholder of Gerui. According to the agreement between the Company and Gerui, all the balances will be paid off before June 30, 2018. The management has determined that no allowance for doubtful debts was necessary. (2). Amounts due to related parties consisted of the following as of June 30, 2017 and December 31, 2016: Item Nature Notes June 30, 2017 December 31, 2016 Ms. Yvonne Wang (“Ms. Wang”) Non-trade (a) 83,798 100,798 CAAS IARRP and IAED Institutes Trade (b) - 160,461 Total $ 83,798 261,259 (a) Yvonne Wang Ms. Wang is a board member and Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. From time to time, Ms. Wang paid various expenses on behalf of the Company. As of June 30, the amount due to Ms. Wang was $83,798. (b) CAAS IARRP and IAED Institutes On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). The term of the Agreement was three years commencing November 20, 2015. Pursuant to the agreement, Kiwa agree to invest RMB 1 million (approximately $160,000) each year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. Prof. Yong Chang Wu, the authorized representative of IARRP, CAAS, is also one of the Company’s directors effective since November 20, 2015 until March 13, 2017. As of June 30, 2018, the Company reclassified the R&D expense payable to CAAS IARRP and IAED Institutes to other payables. |
Convertible Notes Payable
Convertible Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | 10. Convertible Notes Payable (1) Convertible Notes Payable - Current Convertible notes payable - current consists of $ 150,250 of 6% secured convertible notes issued to FirsTrust Group Inc. on June 29, 2006 and $122,715 (face amount $147,424 net of discount of $24,709) of 15% convertible note issued to Mr. Geng Liu on January 17, 2017. 6% secured convertible notes – FirsTrust Group Inc. On June 29, 2006, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with six institutional investors (collectively, the “Purchasers”) for the issuance and sale of 6% secured convertible notes, due three years from the date of issuance, in the aggregate principal amount of $2,450,000 (the “6% Convertible Notes”), convertible into shares of the Company’s common stock. On August 12, 2013, the Company, entered into a Settlement Agreement and Release (the “Release”) with the holders (the “Holders”) of the “6% Convertible Notes” in the aggregate principal amount of $2,000,000. Pursuant to the terms of the Release, the Company paid the Holders $75,000 for a full release, including the forgiveness of past defaults of unpaid principal amounts, interests and penalties. During the course of the time, certain notes had been converted as well. On March 18, 2008, FirsTrust Group, Inc. (“FirsTrust”) purchased the three remaining 6% Convertible Notes, totaling $168,000 ($59,100, $50,400 and $59,100 respectively), from Nite Capital, one of the six institutional investors which purchased a total of $300,000 of the Note in three tranches ($105,000, $90,000, $105,000 respectively), for a cash payment of $100,000. After the Release and conversion, FirsTrust is the only holder of the outstanding 6% Convertible Note with outstanding principal amount of $150,250. On June 29, 2009, the 6% Notes were due. The Company informed the Purchasers of its inability to repay the outstanding balance on the due date. Therefore, the 6% Notes are in default and the default interest rate of 15% per annum is being charged on the 6% Notes. The conversion price of the Notes is based on a 40% discount to the average of the lowest three days trading price of the Company’s common stock on the OTC Bulletin Board over a 20-day trading period. The conversion price is also adjusted for certain subsequent issuances of equity securities of the Company at prices below the conversion price then in effect. The Notes contain a volume limitation that prohibits the holder from further converting the 6% Notes if doing so would cause the holder and its affiliates to hold more than 4.99% of the Company’s outstanding common stock. The Company has elected to early adopt the guidance in ASU 2017-11. As a result, the Company has concluded that the conversion feature of the Notes is indexed to its own stock and would be classified and recorded as equity. The Company retrospectively applied the guidance to the above Notes and determined that the impact of the conversion feature for the above Notes is immaterial. The Company also incurs a financial liquidated damages in cash or shares at the option of the Company (equal to 2% of the outstanding amount of the Notes per month plus accrued and unpaid interest on the Notes, prorated for partial months) if it breaches any affirmative covenants in the Purchase Agreement, including a covenant to maintain a sufficient number of authorized shares under its Certificate of Incorporation to cover at least 110% of the stock issuable upon full conversion of the Notes. Pursuant to the relevant provisions for liquidated damages in Purchase Agreement, the Company has accrued the amounts of $40,814 and $38,108 for liquidated damages for the six months ended June 30, 2017 and 2016 respectively. The Company also accrued $11,176 and $11,238 for interest at the rate of 15% per annum for the six months ended June 30, 2017 and 2016, respectively. The total 15% interest was $194,538 at June 30, 2017. The total accrued liquidated damages were $523,141 at June 30, 2017. The Company’s obligations under the Notes are secured by a first priority security interest in the Company’s intellectual property pursuant to an Intellectual Property Security Agreement with the Holders. In addition, Mr. Li, the Company’s former Chief Executive Officer until July 1, 2015, has pledged all of his common stock of the Company as collateral for the Company’s obligations under the 6% Convertible Notes. 15% convertible notes- Mr. Geng Liu On January 17, 2017, the Company entered a Convertible Note Agreement with Mr. Geng Liu with principal of RMB 3 million. The note bears interest at 15% per annum and will mature on January 16, 2018. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal to the Company’s common shares with a conversion price of $0.90 per share. As of June 30, 2017, the Company has received partial principal totaled RMB 1 million ($147,423 equivalent revalued as at June 30, 2017). The notes are convertible into shares of the common stock, at conversion price is $0.9 which is lower than the price of the Company’s common stock on the date of issue. Therefore, the conversion feature embedded in the convertible note meet the definition of beneficial conversion feature (“BCF”). The Company evaluated the intrinsic value of the BCF as $45,094 at the issue date. The relative fair values of the BCF were recorded into additional paid in capital, and the remainder proceeds of $99,850 from issuance of the convertible note was allocated to convertible notes payable. For the six months ended June 30, 2017, the Company recorded interest expense of $30,252 on the note, including the amortization of the debt discount resulting from the value of beneficial conversion feature, and the carrying value of the note as at June 30, 2017 was $122,715. (2) Convertible Notes Payable - Non-current and derivative liabilities Convertible notes payable – non-current consists $810,828 of 15% convertible note issued to Mr. Junwei Zheng on May 9, 2017. 15% convertible notes- Mr. Junwei Zheng On May 9, 2017, the Company entered a Convertible Note Agreement with Mr. Junwei Zheng with principal of RMB 30 million. The note bears interest at 15% per annum and will mature on May 8, 2019. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal and accrued interest to the Company’s common shares with a conversion price of $3.5 per share. As of June 30, 2017, the Company has received partial principal totaled RMB 5.5 million ($810,828 equivalent revalued at June 30, 2017). The notes are convertible into shares of the common stock, at conversion price is $3.5 which is higher than the price of the Company’s common stock on the date of issue, therefore the conversion feature embedded in the note was out of money at the issue date thus did not meet the definition of BCF. The Company determined that conversion option embedded in the note meet the definition of a derivative instrument. Since the embedded conversion price of the conversion feature is denominated in U.S. dollar, a currency other than the convertible note payable currency. As a result, the embedded conversion feature is not considered indexed to the Company’s own stock due to the variable exchange rate between U.S. Dollar and RMB, and as such, the Company determined that the embedded conversion feature to be carried as a liability and remeasured at fair value at each financial reporting date until such time as the conversion feature is exercised or expired. The Company evaluated the fair value of the embedded conversion feature at the issue date and recorded the amount into as discount to convertible note payable. The discount to convertible note payable is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables at inception on May 9, 2017: ● Strike price of $3.5, for the conversion options ● Expected volatility of 260.8% calculated using the Company’s historical price of its common stock ● Expected dividend yield of 0% ● Risk-free interest rate of 1.37%, for the conversion options ● Expected lives of 2.0 years ● Market price at issuance date of $2.7 The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables on June 30, 2017: ● Strike price of $3.5, for the conversion options ● Expected volatility of 256.4% calculated using the Company’s historical price of its common stock ● Expected dividend yield of 0% ● Risk-free interest rate of 1.35%, for the conversion options ● Expected lives of 1.83 years ● Market price at remeasurement date of $2.74 On May 9, 2017, the Company recorded $569,784 as derivative liability for fair value of the conversion option. The initial carrying value of the Notes was $227,051. On June 30, 2017, the fair value of derivative liabilities was recalculated at $576,345. For the three months and six months ended June 30, 2017, the Company recognized a gain of $6,561, in change in fair value of derivative liabilities. For the six months ended June 30, 2017, the Company recorded interest expense of $58,497 on the note, including the amortization of the debt discount resulting from the value of the embedded conversion feature, and the carrying value of the note as of June 30, 2017 was $282,412. |
Note Payable
Note Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Note Payable | 11. Note Payable On May 29, 2007, the Company issued a $360,000 promissory note (the “Promissory Note”) to an unrelated individual (the “Original Note holder”). This note bears interest at 18% per annum and was due on July 27, 2007. This note is currently in default and bears interest of 25% per annum (the “Default rate”) until paid in full. This note is secured by a pledge of shares of the Company’s common stock owned by Investlink (China) Limited (the “Pledged Shares”). The Company accrued $22,500 and $22,500 interest expense on note payable for the three months ended June 30, 2017 and 2016, respectively, and $45,000 and $45,000 interest expense on note payable for the six months ended June 30, 2017 and 2016, respectively. As of December 31, 2016, the Original Note holder informed the Company that all right, title and interests in the Promissory Note has been assigned and transferred to FirsTrust. As of June 30, 2017, all of $360,000 of Promissory Note to FirsTrust is still outstanding, and total accrued interest of the Promissory Note is $ 904,300. The Company has begun preliminary discussion with FirsTrust with regards to a potential settlement of the Note, but no agreement has been reached yet. |
Other Payables and Accruals
Other Payables and Accruals | 6 Months Ended |
Jun. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Payables and Accruals | 12. Other Payables and Accruals Other payables and accruals includes the payables to two unrelated potential investors, R&D expense payable to CAAS IARRP and IAED, accrued expenses and other liabilities. As of June 30, 2017, two potential investors have made the payments approximately $471,754 to the Company and the investment agreements have not been finalized. As of June 30, 2017, the Company had R&D expense payable to CAAS IARRP and IAED at $233,598. Other payables and accruals were $1,116,574 at June 30, 2017. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 13. Stockholders’ Equity During the six months ended June 30, 2017, the Company issued 1,096,900 common shares to two individuals residing in China for net proceeds of $1,290,700. On June 30, 2017, the Company issued 97,850 common shares to ten employees for cash at $1.95 per share for an aggregate price to $190,807. The difference $102,273 based on the calculation between stock price and employee purchase price was recognized as expense of employee benefits and accordingly, credited the same amount to APIC. During the six months ended June 30, 2017, the Company entered into three consulting agreements and issued 104,488 shares of common stocks to consultants for financing and IT services based on market price of issuance. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | 14. Stock-based Compensation On March 15, 2017, the Board of Directors approved a new stock option plan with ten years’ term. As of June 30, 2017, the Company has not granted any incentive compensation under this plan. |
Income Tax
Income Tax | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax | 15. Income Tax In accordance with the current tax laws in China, Kiwa Beijing is subject to a corporation income tax rate of 25% on its taxable income. For the six months ended June 30, 2017, it recorded income tax provision for RMB 4,112,924 or approximately $598,222. For the three months ended June 30, 2017, it recorded income tax provision for RMB 2,601,847 or approximately $379,173. Provision for taxes $800 to the minimum California state franchise tax. In accordance with the relevant tax laws in the British Virgin Islands, Kiwa BVI, as an International Business Company, is exempt from income taxes. A reconciliation of the provision for income taxes determined at the local income tax rate to the Company’s effective income tax rate is as follows: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Pre-tax income $ (863,945 ) $ 235,266 $ (1,406,613 ) $ 345,727 Income tax computed at U.S. federal corporation income tax rate (292,942 ) 79,990 (478,248 ) 117,547 Reconciling items: Rate differential 29,325 (146,672 ) 48,623 (237,249 ) Change of valuation allowance 207,758 66,682 310,395 119,702 Non-deductible expenses 8,034 - 20,009 - Effective tax expenses $ (47,825 ) $ - $ (99,221 ) $ - The Company had deferred tax assets as follows: June 30, 2017 December 31, 2016 Net operating losses $ 3,458,902 $ 2,555,064 Less: Valuation allowance (2,751,182 ) (2,555,064 ) Net deferred tax assets $ 707,720 $ - As of June 30, 2017 and December 31, 2016, the Company had approximately $10.2 million and $7.5 million net operating loss carryforwards available to reduce future taxable income. Net operating loss of the Company could be carried forward and taken against any taxable income for a period of not more than twenty years from the year of the initial loss pursuant to Section 172 of the Internal Revenue Code of 1986, as amended. The net operating loss of Kiwa Beijing could be carried forward for a period of not more than five years from the year of the initial loss pursuant to relevant PRC tax laws and regulations. As of June 30, 2017, the Company recorded $2,751,182 valuation allowance, and the deferred tax assets was $707,720. As of June 30, 2017 and December 31, 2016, the Company has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during six months ended June 30, 2017 and December 31, 2016, and no provision for interest and penalties is deemed necessary as of June 30, 2017 and December 31, 2016. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies The Company has the following material contractual obligations: (1) Investment in manufacturing facilities in Penglai City, Shandong Province in China On June 8, 2017, the Company entered an equity purchase agreement with Yantai Peng Hao New Materials Technology Co. Ltd. (“Acquirer”), which relates to the acquisition of a new factory for purchase price of about $2.2 million (approximately RMB 15 million). The factory to be acquired by the Company will be completed in accordance with the Company’s construction plan to facilitate the production design of combining of microbial fermentation and terminal fertilizer products. Pursuant to the payment terms of purchase agreement, the Company made the first payment of $147,423 (approximately RMB 1,000,000) to the Acquirer on June, 2017 and will make the second payment of RMB 10,000,000 as long as the Company obtains the land use right certificate and will make the final payment of RMB 4,000,000 after the government processing has been completed. (2) Strategic cooperation with the institutes in China On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). Pursuant to the Agreement, the Company will form a strategic partnership with the two institutes and establish an “International Cooperation Platform for Internet and Safe Agricultural Products”. To fund the cooperation platform’s R&D activities, the Company will provide RMB 1 million (approximately $160,000) per year to the Spatial Agriculture Planning Method & Applications Innovation Team that belongs to the Institutes. The term of the Agreement is for three years beginning November 20, 2015 and will expire on November 19, 2018. (3) Distribution agreement with Kangtan Gerui Bio-Tech in China On December 17, 2015, Kiwa Bio-Tech Products Group Corporation (the “Company”) entered into a distribution agreement (the “Agreement”) with Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”) and formally awarded Gerui a right to sell and distribute the Company’s fertilizer products in 3 major agricultural regions of China— Hainan Province, Hunan Province and Xinjiang Autonomous Region. The Company’s Research and Development department has been conducting application experiments in Hainan and Hunan Provinces since August 2015, in accordance with the market requirements. The experiment data indicates that the Company’s fertilizer products have fulfilled the requirements of reduction of content of heavy metals in soil and improve crop yield. Gerui was founded in Beijing in April 2015 and relies on the sales network of China’s Supply and Marketing Cooperatives system. Currently, the Company and Gerui do not hold any interest in each other; however, a collaboration and integration may take place in the future. The term of the Agreement is for a period of three years commencing December 17, 2015. In September 2016, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd obtained a fertilizer sales permit from the Chinese government and began to sale the products directly to customers in those 3 major agricultural regions. (4) Lease payments (1) On April 29, 2016, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd. entered an office lease agreement with two-year term. Monthly lease payment and building management fee totaled RMB 77,867 or approximately USD $11,303. (2) In June 20, 2017, Kiwa Bio-Tech (Shenzhen) Co., Ltd, a newly established subsidiary entered an office lease agreement with two-year term. Monthly lease payment is RMB 115,000 or approximately of USD $16,954. And the previous lease agreement terminated automatically since the landloard is the same one. (3) On May 5, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with 13 months term. Monthly lease payment totaled USD $680. (4) On July 1, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with one-year term. Monthly lease payment totaled USD $1,087. The future lease payments at June 30, 2017 are summarized below. Beijing Office Shenzhen Office USA Office Total 2017 $ 68,876 $ 101,722 $ 10,605 $ 181,203 2018 $ 45,917 203,444 $ 9,925 $ 259,286 2019 $ - $ 101,722 $ - $ 101,722 Thereafter $ - $ - $ - $ - |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 17. Discontinued Operations On February 11, 2017, the Company executed an Equity Transfer Agreement with Dian Shi Cheng Jing (Beijing) Technology Co. (“Transferee”) whereby the Company transferred all of its right, title and interest in Kiwa Bio-Tech Products (Shandong) Co., Ltd. (“Shandong”) to the Transferee for the RMB equivalent of US$1.00. The government processing of the transaction has been completed on April 12, 2017. This transaction was completed and effective on April 12, 2017. The Company recorded a net gain of approximately $4,512,182 during the six months ended June 30, 2017 and approximately $4,513,363 during the three months ended June 30, 2017 based on the discharge of the excess liabilities over the assets of the Kiwa Shandong. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 18. Subsequent Events On July 1, 2017, Kiwa Bio-Tech Products Group Corporation entered an office lease agreement with two-year term. Monthly lease payment totaled USD $1,087. On July 19, 2017, the Company entered into Common Stock Purchase Agreement with Junwei Zheng. Pursuant to the Agreement, the Company will issue total 245,000 shares of restricted common stock at $3.00 per share price for an aggregate amount of $735,000. As of August 14, 2017, the Company has not received the amount yet. On July 19, 2017, the Company entered into Common Stock Purchase Agreement with Quanzhen Shen. Pursuant to the Agreement, the Company will issue total 98,000 shares of restricted common stock at $3.00 per share price for an aggregate amount of $294,000. The Company has received the full amount. On July 19, 2017, the Company issued 49,000 common shares to Quanzhen Shen for her consulting service to assist the Company in financing projects. The number of shares was determined based on the fair value of the service. The agreement has one year term. On July 18, 2017, the Company issued 39,000 common shares to Yuan Wang in assistance with the Company financing projects. The number of shares was determined based on the fair value of the service. The agreement has one year term. On August 3, 2017, the Company fully collected $487,627 (RMB 3,360,000) of the entire subscribe receivable balance at December 31, 2016. The Company has evaluated the existence of significant events subsequent to the balance sheet date through the date these financial statements were issued on August 14, 2017 and has determined that, other than as stated above, there were no subsequent events or transactions which would require recognition or disclosure in the financial statements, other than noted herein. |
Summaries of Significant Acco_2
Summaries of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Principle of Consolidation | Principle of Consolidation These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries, Kiwa BVI, Hong Kong Baina Group Holding Company, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd, Kiwa Baiao Bio-Tech (Beijing) Co., Ltd (“Kiwa Beijing”), Kiwa Bio-Tech Products (Shenzhen) Co., Ltd and Kiwa Bio-Tech Products (Hebei) Co., Ltd. All significant inter-company balances or transactions are eliminated on consolidation. |
Reverse Split | Reverse Split On January 14, 2016, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the State of Delaware with reference to a 1-for-200 reverse stock split with respect to its Common Stock with effective date of January 28, 2016. In connection with the reverse split, the Company’s authorized capital was amended to be 120,000,000 shares, comprising 100,000,000 shares of Common Stock par value $0.001 and 20,000,000 shares of Preferred Stock par value $0.001. All relevant information relating to numbers of shares, options and per share information have been retrospectively adjusted to reflect the reverse stock split for all periods presented. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates include the valuation of securities issued, deferred tax assets and related valuation allowance. Certain of our estimates, including evaluating the collectability of accounts receivable and the fair market value of long-lived assets, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates annually based on these conditions and record adjustments when necessary. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carring amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents. |
Accounts Receivables | Accounts Receivables Accounts receivable represent amounts due from customers in the ordinary course of business and are recorded at the invoiced amount and do not bear interest. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience, the economic environment, trends in the microbial fertilizer industry, and a review of the current status of trade accounts receivable. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. Such allowances, if any, would be recorded in the period the impairment is identified. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted.There was $55,240 allowance for doubtful accounts at June 30, 2017 and December 31, 2016. |
Property, Plant and Equipment | Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of property, plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows: Useful Life (In years) Buildings 30 - 35 Machinery and equipment 5 - 10 Automobiles 8 Office equipment 2 - 5 Computer software 3 Leasehold improvements The shorter of the lease term and useful life |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets The Company’s long-lived assets consist of property, equipment and intangible assets. The Company evaluates its investment in long-lived assets, including property and equipment, for recoverability whenever events or changes in circumstances indicate the net carrying amount may not be recoverable. Judgments regarding potential impairment are based on legal factors, market conditions and operational performance indicators, among others. In assessing the impairment of property and equipment, the Company makes assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets. |
Financial Instruments | Financial Instruments The Company analyzes all financial instruments with features of both liabilities and equity under FASB Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”. Embedded conversion features of convertible debentures not considered to be derivative instruments The embedded conversion features of convertible debentures not considered to be derivative instruments provide for a rate of conversion that is below market value. Such feature is normally characterized as a “beneficial conversion feature” (“BCF”). The relative fair values of the BCF were recorded as discounts from the face amount of the respective debt instrument. The Company amortized the discount using the straight-line method which approximates the effective interest method through maturity of such instruments. Embedded conversion features of convertible debentures that are classified as derivative liabilities The embedded conversion features of convertible debentures that are classified as derivative liabilities are recorded at fair value as a discount from the face amount of the respective debt instrument. The discount is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. These instruments are accounted for as derivative liabilities and marked-to-market each reporting period. The change in the value of the derivative liabilities is charged against or credited to income in the captioned “change in fair value of derivative liabilities” in the accompanying unaudited condensed consolidated statements of operations and comprehensive income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value with U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: ● Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. ● Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. ● Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Derivative instruments are carried at fair value, estimated using the Black Scholes Merton model. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. |
Revenue Recognition | Revenue Recognition The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company derives its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via sales contract and invoice; and the sales price to the customer is fixed upon acceptance of the sales contract and there is no separate sales rebate, discount, or volume incentive. The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured. The Company’s customers are mainly agricultural cooperative company and distributors who then resell the Company’s products to individual farmers. Because the crop growing cycle usually takes approximately 3 to 9 months in the agricultural industry, for some co-ops and distributors, it will take approximately similar time frame of 3 to 9 months for farmers to harvest crops and to realize profits to repay them. As a result, for the sales contracts with these customers, the collectability of payment is highly dependent on the successful harvest of corps and the customers’ ability to collect money from farmers. The Company deemed the collectability of payment may not be reasonably assured until after the Company get paid. For those sales contracts that the Company has shipped its products but the payment is contingent on collections of payments from the downstream customers, the Company considers the revenue recognition criteria are not met and therefore defers the revenue and cost of goods sold until payments are collected. These revenue and cost of goods sold are classified in the captioned “Deferred revenue” and “Deferred cost of goods sold” in the accompanying unaudited condensed consolidated balance sheets. For other customers whose repayment term is within normal business course and not dependent on the harvest of corps, the Company recognized revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company. |
Deferred Revenue and Deferred Cost of Goods Sold | Deferred Revenue and Deferred Cost of Goods Sold Deferred revenue and deferred cost of goods sold result from transactions where the Company has shipped product for which all revenue recognition criteria have not yet been met. Deferred cost of goods sold related to deferred product revenues includes direct inventory costs. Once all revenue recognition criteria have been met, the deferred revenues and associated cost of goods sold are recognized. |
Income Taxes | Income Taxes The Company accounts for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation allowance when it is more likely than not that the assets will not be recovered. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. |
Stock Based Compensation | Stock Based Compensation The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received. |
Foreign Currency Translation and Other Comprehensive Income | Foreign Currency Translation and Other Comprehensive Income The Company uses United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”), being the functional currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of comprehensive loss and the statement of cash flow are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income. Other comprehensive income for the six months ended June 30, 2017 and 2016 represented foreign currency translation adjustments and were included in the consolidated statements of comprehensive loss. The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows: As of June 30, 2017 As of December 31, 2016 Balance sheet items, except for equity accounts 6.7832 6.9472 Six months ended June 30 2017 2016 Items in the statements of comprehensive loss 6.8753 6.5345 |
Earnings Per Common Share | Earnings Per Common Share Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. |
Related Parties | Related Parties The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
Commitments and Contingencies | Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Cash Flows Reporting | Cash Flows Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification. |
Summaries of Significant Acco_3
Summaries of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Assets | Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows: Useful Life (In years) Buildings 30 - 35 Machinery and equipment 5 - 10 Automobiles 8 Office equipment 2 - 5 Computer software 3 Leasehold improvements The shorter of the lease term and useful life |
Schedule of Foreign Currency Exchange Rate | The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows: As of June 30, 2017 As of December 31, 2016 Balance sheet items, except for equity accounts 6.7832 6.9472 Six months ended June 30 2017 2016 Items in the statements of comprehensive loss 6.8753 6.5345 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable, Net [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable, net consisted of the following: June 30, 2017 December 31, 2016 Accounts receivable $ 9,480,599 $ 1,177,994 Less: Allowance for doubtful accounts (55,240 ) (55,240 ) Accounts receivable, net $ 9,425,359 $ 1,122,754 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Prepaid Expenses | |
Schedule of Prepaid Expenses | Prepaid expenses consisted of the following: June 30, 2017 December 31, 2016 Prepaid office rent $ 28,021 $ 12,504 Prepaid government filing expense 33,588 5,000 Prepaid office expense 5,160 - Prepaid Consulting fee 1,131,744 1,400,050 $ 1,198,513 $ 1,417,554 |
Rent Deposit and Other Receiv_2
Rent Deposit and Other Receivable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Rent Deposit And Other Receivable | |
Schedule of Rent Deposit and Other Receivable | Rent deposit and other receivables consisted of the following: June 30, 2017 December 31, 2016 Advance to employees $ 101,103 $ 38,897 Rent deposit 39,301 - Others 19,995 - Other receivables, net $ 160,399 $ 38,897 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property Plant and Equipment | Property, plant and equipment, net consisted of the following: June 30, 2017 December 31, 2016 Office equipment $ 3,975 $ 896 Furniture 8,028 7,838 Leasehold improvements 69,816 66,896 Total Property, plant and equipment $ 81,819 $ 75,630 Less: accumulated depreciation (40,123 ) (20,311 ) Property, plant and equipment - net $ 41,696 $ 55,319 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | (1). Amounts due from related parties consisted of the following as of June 30, 2017 and December 31, 2016: Item Nature Notes June 30, 2017 December 31, 2016 Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. (“Gerui”) Non-trade (a) 1,350,193 1,522,434 Total $ 1,350,193 $ 1,522,434 (a) Gerui Ms. Feng Li, a member of the Company’s board of directors and shareholder of the Company (Ms. Li held approximately 20% of the Company’s Common Stock and 50% of the Company’s Series A Preferred Stock), is also a 23% shareholder of Gerui. According to the agreement between the Company and Gerui, all the balances will be paid off before June 30, 2018. The management has determined that no allowance for doubtful debts was necessary. (2). Amounts due to related parties consisted of the following as of June 30, 2017 and December 31, 2016: Item Nature Notes June 30, 2017 December 31, 2016 Ms. Yvonne Wang (“Ms. Wang”) Non-trade (a) 83,798 100,798 CAAS IARRP and IAED Institutes Trade (b) - 160,461 Total $ 83,798 261,259 (a) Yvonne Wang Ms. Wang is a board member and Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. From time to time, Ms. Wang paid various expenses on behalf of the Company. As of June 30, the amount due to Ms. Wang was $83,798. (b) CAAS IARRP and IAED Institutes On November 5, 2015, the Company signed a strategic cooperation agreement (the “Agreement”) with China Academy of Agricultural Science (“CAAS”)’s Institute of Agricultural Resources & Regional Planning (“IARRP”) and Institute of Agricultural Economy & Development (“IAED”). The term of the Agreement was three years commencing November 20, 2015. |
Income Tax (Tables)
Income Tax (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of U.S. Tax Rate | A reconciliation of the provision for income taxes determined at the local income tax rate to the Company’s effective income tax rate is as follows: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Pre-tax income $ (863,945 ) $ 235,266 $ (1,406,613 ) $ 345,727 Income tax computed at U.S. federal corporation income tax rate (292,942 ) 79,990 (478,248 ) 117,547 Reconciling items: Rate differential 29,325 (146,672 ) 48,623 (237,249 ) Change of valuation allowance 207,758 66,682 310,395 119,702 Non-deductible expenses 8,034 - 20,009 - Effective tax expenses $ (47,825 ) $ - $ (99,221 ) $ - |
Schedule of Deferred Tax Assets | The Company had deferred tax assets as follows: June 30, 2017 December 31, 2016 Net operating losses $ 3,458,902 $ 2,555,064 Less: Valuation allowance (2,751,182 ) (2,555,064 ) Net deferred tax assets $ 707,720 $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Lease Payments | The future lease payments at June 30, 2017 are summarized below. Beijing Office Shenzhen Office USA Office Total 2017 $ 68,876 $ 101,722 $ 10,605 $ 181,203 2018 $ 45,917 203,444 $ 9,925 $ 259,286 2019 $ - $ 101,722 $ - $ 101,722 Thereafter $ - $ - $ - $ - |
Description of Business and O_2
Description of Business and Organization (Details Narrative) - $ / shares | Jun. 30, 2017 | Feb. 11, 2017 |
Percentage of ownership | 89.00% | |
Equity Transfer Agreement [Member] | ||
Sale of stock, price per share | $ 1 |
Summaries of Significant Acco_4
Summaries of Significant Accounting Policies (Details Narrative) - USD ($) | Jan. 14, 2016 | Jun. 30, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | |||
Reverse stock split | 1-for-200 | ||
Authorized capital | 120,000,000 | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Investment term | 3 months | ||
Allowance for doubtful account | $ 55,240 | $ 55,240 |
Summaries of Significant Acco_5
Summaries of Significant Accounting Policies - Schedule of Estimated Useful Lives of Assets (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Buildings [Member] | Minimum [Member] | |
Property, plant and equipment useful life (In years) | 30 years |
Buildings [Member] | Maximum [Member] | |
Property, plant and equipment useful life (In years) | 35 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, plant and equipment useful life (In years) | 5 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property, plant and equipment useful life (In years) | 10 years |
Automobiles [Member] | |
Property, plant and equipment useful life (In years) | 8 years |
Office Equipment [Member] | Minimum [Member] | |
Property, plant and equipment useful life (In years) | 2 years |
Office Equipment [Member] | Maximum [Member] | |
Property, plant and equipment useful life (In years) | 5 years |
Computer Software [Member] | |
Property, plant and equipment useful life (In years) | 3 years |
Leasehold Improvements [Member] | |
Property, plant and equipment useful life, description | The shorter of the lease term and useful life |
Summaries of Significant Acco_6
Summaries of Significant Accounting Policies - Schedule of Foreign Currency Exchange Rate (Details) | Jun. 30, 2017 | Feb. 11, 2017 | Dec. 31, 2016 |
Foreign currency exchange rate, translation | 1 | ||
Balance Sheet Items, Except for Equity Accounts [Member] | |||
Foreign currency exchange rate, translation | 6.7832 | 6.9472 | |
Items in the Statements of Comprehensive Loss [Member] | |||
Foreign currency exchange rate, translation | 6.8753 | 6.5345 |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of Accounts Receivable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable | $ 9,480,599 | $ 1,177,994 |
Less: Allowance for doubtful accounts | (55,240) | (55,240) |
Accounts receivable, net | $ 9,425,359 | $ 1,122,754 |
Prepaid Expenses - Schedule of
Prepaid Expenses - Schedule of Prepaid Expenses (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Prepaid Expenses | ||
Prepaid office rent | $ 28,021 | $ 12,504 |
Prepaid government filing expense | 33,588 | 5,000 |
Prepaid office expense | 5,160 | |
Prepaid Consulting fee | 1,131,744 | 1,400,050 |
Prepaid expenses | $ 1,198,513 | $ 1,417,554 |
Rent Deposit and Other Receiv_3
Rent Deposit and Other Receivable - Schedule of Rent Deposit and Other Receivable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Other receivable, net | $ 160,399 | $ 38,897 |
Advance to Employees [Member] | ||
Other receivable, net | 101,103 | 38,897 |
Rent Deposit [Member] | ||
Other receivable, net | 39,301 | |
Others [Member] | ||
Other receivable, net | $ 19,995 |
Advances to Suppliers (Details
Advances to Suppliers (Details Narrative) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Advances To Suppliers | ||
Advance to suppliers | $ 1,255,218 | $ 1,880,044 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 8,318 | $ 2,036 | $ 17,787 | $ 2,036 |
Percentage of property plant and equipment held as collateral to secure | 6.00% |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net - Schedule of Property Plant and Equipment, Net (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Property, plant and equipment - total | $ 81,819 | $ 75,630 |
Less: accumulated depreciation | (40,123) | (20,311) |
Property, plant and equipment - net | 41,696 | 55,319 |
Office Equipment [Member] | ||
Property, plant and equipment - total | 3,975 | 896 |
Furniture [Member] | ||
Property, plant and equipment - total | 8,028 | 7,838 |
Leasehold Improvements [Member] | ||
Property, plant and equipment - total | $ 69,816 | $ 66,896 |
Other Long-Term Assets (Details
Other Long-Term Assets (Details Narrative) - Equity Purchase Agreement [Member] | Jun. 08, 2017USD ($) | Jun. 08, 2017CNY (¥) | Jun. 30, 2017USD ($) | Jun. 30, 2017CNY (¥) |
Payment to acquire land use rights | $ | $ 1,000,000 | |||
Payment made upon business licenses transfer | $ | 50,000 | |||
RMB [Member] | ||||
Payment to acquire land use rights | ¥ | ¥ 6,500,000 | |||
Payment made upon business licenses transfer | ¥ | 3,500,000 | |||
Yantai Peng Hao New Materials Technology Co. Ltd [Member] | ||||
Payments to acquire new factory | $ | $ 2,200,000 | $ 147,423 | ||
Yantai Peng Hao New Materials Technology Co. Ltd [Member] | RMB [Member] | ||||
Payments to acquire new factory | ¥ | ¥ 15,000,000 | ¥ 1,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Nov. 05, 2015 | Jun. 30, 2017 |
Related Party Transaction [Line Items] | ||
Percentage of ownership | 89.00% | |
Yvonne Wang [Member] | ||
Related Party Transaction [Line Items] | ||
Due to related parties | $ 83,798 | |
CAAS IARRP and IAED Institutes [Member] | ||
Related Party Transaction [Line Items] | ||
Related party transaction amount | $ 160,000 | |
CAAS IARRP and IAED Institutes [Member] | RMB [Member] | ||
Related Party Transaction [Line Items] | ||
Related party transaction amount | $ 1,000,000 | |
Ms.Feng Li [Member] | Series A Preferred Stock [Member] | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership | 50.00% | |
Ms.Feng Li [Member] | Common Stock [Member] | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership | 20.00% | |
Kangtan Gerui Beijing Bio Tech Co Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership | 23.00% |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||
Amounts due from related parties | $ 1,350,193 | $ 1,522,434 |
Amounts due to related parties | 83,798 | 261,259 |
Kangtan Gerui (Beijing) Bio-Tech Co., Ltd. [Member] | Non-Trade Transaction [Member] | ||
Related Party Transaction [Line Items] | ||
Amounts due from related parties | 1,350,193 | 1,522,434 |
Ms. Yvonne Wang [Member] | Non-Trade Transaction [Member] | ||
Related Party Transaction [Line Items] | ||
Amounts due to related parties | 83,798 | 100,798 |
CAAS IARRP and IAED Institutes [Member] | Trade Transaction [Member] | ||
Related Party Transaction [Line Items] | ||
Amounts due to related parties | $ 160,461 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) | May 09, 2017USD ($)$ / shares | Jan. 17, 2017USD ($)$ / shares | Aug. 12, 2013USD ($) | Mar. 18, 2008USD ($) | Jun. 29, 2006USD ($) | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2017CNY (¥) | Jun. 30, 2016USD ($) | May 09, 2017CNY (¥) | Dec. 31, 2016USD ($) |
Convertible notes payable | $ 272,965 | $ 272,965 | $ 150,250 | |||||||||
Accrued amounts of liquidity damages | 523,141 | |||||||||||
Interest expense | 186,649 | $ 94,551 | ||||||||||
Interest payable | 1,649,102 | 1,649,102 | 1,524,988 | |||||||||
Proceeds from convertible debt | 955,955 | |||||||||||
Convertible notes payable, noncurrent | 282,412 | 282,412 | ||||||||||
Derivative liabilities fair value | 576,345 | 576,345 | ||||||||||
Gain loss on derivative | $ 6,561 | $ 6,561 | ||||||||||
6% Notes [Member] | ||||||||||||
Notes beard interest | 6.00% | 15.00% | 15.00% | 15.00% | 15.00% | |||||||
Debt instruments maturity date | Jun. 29, 2009 | |||||||||||
Note default rate | 15.00% | |||||||||||
Percentage of discount to average of trading price | 40.00% | |||||||||||
Maximum percentage of affiliates to hold outstanding common stock | 4.99% | |||||||||||
Percentage of equal shares purchaser entitled to multiplied by market price for each day | 2.00% | |||||||||||
Percentage of stock issuable upon full conversion of notes and warrants | 110.00% | |||||||||||
Accrued amounts of liquidity damages | $ 40,814 | $ 38,108 | ||||||||||
Interest expense | 11,176 | $ 11,238 | ||||||||||
Interest payable | $ 194,538 | 194,538 | ||||||||||
15% Convertible Notes [Member] | Mr. Junwei Zheng [Member] | ||||||||||||
Convertible notes payable | $ 227,051 | |||||||||||
Derivative liability | $ 569,784 | |||||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | ||||||||||||
Convertible notes payable | 122,715 | 122,715 | ||||||||||
Notes beard interest | 15.00% | |||||||||||
Debt instruments maturity date | Jan. 16, 2018 | |||||||||||
Interest expense | 30,252 | |||||||||||
Debt conversion price | $ / shares | $ 0.90 | |||||||||||
Proceeds from convertible debt | $ 99,850 | 147,423 | ||||||||||
Beneficial conversion features | 45,094 | |||||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | ||||||||||||
Convertible notes payable | $ 282,412 | 282,412 | ||||||||||
Notes beard interest | 15.00% | 15.00% | ||||||||||
Debt instruments maturity date | May 8, 2019 | |||||||||||
Interest expense | 58,497 | |||||||||||
Debt conversion price | $ / shares | $ 3.5 | |||||||||||
Proceeds from convertible debt | $ 810,828 | |||||||||||
Convertible notes payable, noncurrent | $ 810,828 | |||||||||||
Strike price of conversion options | $ / shares | $ 3.5 | $ 3.5 | ||||||||||
Market price | $ / shares | $ 2.7 | $ 2.74 | $ 2.74 | |||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | Expected Volatility [Member] | ||||||||||||
Fair value assumptions, measurement input, percentages | 260.80% | 256.40% | 256.40% | |||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | Expected Dividend [Member] | ||||||||||||
Fair value assumptions, measurement input, percentages | 0.00% | 0.00% | 0.00% | |||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | Risk Free Interest Rate [Member] | ||||||||||||
Fair value assumptions, measurement input, percentages | 1.37% | 1.35% | 1.35% | |||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | Expected Lives [Member] | ||||||||||||
Fair value assumptions, measurement input, term | 2 years | 1 year 9 months 29 days | 1 year 9 months 29 days | |||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | RMB [Member] | ||||||||||||
Debt instruments face amount | 3,000,000 | |||||||||||
Proceeds from convertible debt | $ 1,000,000 | |||||||||||
15% Convertible Notes [Member] | Convertible Note Agreement [Member] | RMB [Member] | Mr. Junwei Zheng [Member] | ||||||||||||
Debt instruments face amount | ¥ | ¥ 30,000,000 | |||||||||||
Proceeds from convertible debt | ¥ | ¥ 5,500,000 | |||||||||||
FirsTrust Group, Inc [Member] | ||||||||||||
Convertible notes payable | $ 150,250 | |||||||||||
Percentage of secured convertible notes issued | 6.00% | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes [Member] | ||||||||||||
Convertible notes payable | $ 2,000,000 | $ 168,000 | ||||||||||
Debt instruments face amount | $ 150,250 | |||||||||||
Notes beard interest | 6.00% | |||||||||||
Repayment of debt | $ 75,000 | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes [Member] | Securities Purchase Agreement [Member] | ||||||||||||
Convertible notes payable | $ 2,450,000 | |||||||||||
Notes beard interest | 6.00% | |||||||||||
Debt term | 3 years | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes One [Member] | ||||||||||||
Convertible notes payable | $ 59,100 | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes Two [Member] | ||||||||||||
Convertible notes payable | 50,400 | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes Three [Member] | ||||||||||||
Convertible notes payable | 59,100 | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes Three [Member] | Investors [Member] | ||||||||||||
Convertible notes payable | 300,000 | |||||||||||
Repayment of debt | 100,000 | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes Three [Member] | Investors [Member] | Tranche One [Member] | ||||||||||||
Convertible notes payable | 105,000 | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes Three [Member] | Investors [Member] | Tranche Two [Member] | ||||||||||||
Convertible notes payable | 90,000 | |||||||||||
FirsTrust Group, Inc [Member] | 6% Notes Three [Member] | Investors [Member] | Tranche Three [Member] | ||||||||||||
Convertible notes payable | $ 105,000 | |||||||||||
Mr. Geng Liu [Member] | ||||||||||||
Convertible notes payable | $ 122,715 | |||||||||||
Percentage of secured convertible notes issued | 15.00% | |||||||||||
Debt instruments face amount | $ 147,424 | |||||||||||
Debt discount | $ 24,709 |
Note Payable (Details Narrative
Note Payable (Details Narrative) - USD ($) | May 29, 2007 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Promissory note | $ 360,000 | $ 360,000 | $ 360,000 | |||
Accrued interest expense | 22,500 | $ 22,500 | 45,000 | $ 45,000 | ||
Unrelated Individual [Member] | ||||||
Promissory note | $ 360,000 | |||||
Note interest rate | 18.00% | |||||
Note maturity date | Jul. 27, 2007 | |||||
Note default rate | 25.00% | |||||
FirsTrust [Member] | ||||||
Promissory note | $ 360,000 | 360,000 | ||||
Accrued interest expense | $ 904,300 |
Other Payables and Accruals (De
Other Payables and Accruals (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Payments from investors | $ 17,000 | $ 40,500 | |||
Research and development expenses | $ 36,433 | $ 36,488 | 72,724 | $ 75,252 | |
Other payables | $ 1,116,574 | 1,116,574 | $ 924,875 | ||
Two Potential Investors [Member] | |||||
Payments from investors | 471,754 | ||||
CAAS IARRP and IAED Institutes [Member] | |||||
Research and development expenses | $ 233,598 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares |
Two Individual [Member] | ||
Stock issued during period shares | shares | 1,096,900 | |
Stock issued during period value | $ | $ 1,290,700 | |
Ten Employees [Member] | ||
Stock issued during period shares | shares | 97,850 | |
Stock issued during period value | $ | $ 190,807 | |
Shares issued price per share | $ / shares | $ 1.95 | $ 1.95 |
Employee related liabilities | $ | $ 102,273 | $ 102,273 |
Consultants [Member] | Three Consulting Agreement [Member] | ||
Stock issued for services | shares | 104,488 |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - shares | Mar. 15, 2017 | Jun. 30, 2017 |
Stock options granted during the period | ||
Board of Directors [Member] | ||
Stock option plan term | 10 years |
Income Tax (Details Narrative)
Income Tax (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2017USD ($) | Jun. 30, 2017CNY (¥) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2017CNY (¥) | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Income tax provision | $ 47,825 | $ 99,221 | |||||
Operating loss carry forwards | 10,200,000 | 10,200,000 | $ 7,500,000 | ||||
Deferred tax assets valuation allowance | 2,751,182 | 2,751,182 | 2,555,064 | ||||
Deferred tax assets | 707,720 | 707,720 | |||||
Unrecognized tax benefits | |||||||
Interest or penalties | |||||||
Provision for interest and penalties | |||||||
California State Franchise Tax [Member] | |||||||
Income tax provision | $ 800 | ||||||
Kiwa Beijing [Member] | |||||||
Effective income tax rate | 25.00% | 25.00% | |||||
Income tax provision | $ 379,173 | $ 598,222 | |||||
Kiwa Beijing [Member] | RMB [Member] | |||||||
Income tax provision | ¥ | ¥ 2,601,847 | ¥ 4,112,924 |
Income Tax - Schedule of Reconc
Income Tax - Schedule of Reconciliation of U.S. Tax Rate (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Pre-tax income | $ (863,945) | $ 235,266 | $ (1,406,613) | $ 345,727 |
Income tax computed at U.S. federal corporation income tax rate | (292,942) | 79,990 | (478,248) | 117,547 |
Rate differential | 29,325 | (146,672) | 48,623 | (237,249) |
Change of valuation allowance | 207,758 | 66,682 | 310,395 | 119,702 |
Non-deductible expenses | 8,034 | 20,009 | ||
Effective tax expenses | $ (47,825) | $ (99,221) |
Income Tax - Schedule of Deferr
Income Tax - Schedule of Deferred Tax Assets (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net operating losses | $ 3,458,902 | $ 2,555,064 |
Less: Valuation allowance | (2,751,182) | (2,555,064) |
Net deferred tax assets | $ 707,720 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Jul. 02, 2017USD ($) | Jun. 20, 2017USD ($) | Jun. 20, 2017CNY (¥) | Jun. 08, 2017USD ($) | Jun. 08, 2017CNY (¥) | May 05, 2017USD ($) | Apr. 29, 2016USD ($) | Apr. 29, 2016CNY (¥) | Nov. 05, 2015USD ($) |
Kiwa Baiao Bio-Tech (Beijing) Co., Ltd [Member] | Office Lease Agreement [Member] | |||||||||
Lease term | 2 years | 2 years | |||||||
Payments for Rent | $ 11,303 | ||||||||
Kiwa Baiao Bio-Tech (Shenzhen) Co., Ltd [Member] | Apartment Lease Agreement [Member] | |||||||||
Lease term | 2 years | 2 years | |||||||
Payments for Rent | $ 16,954 | ||||||||
Kiwa Baiao Bio-Tech Product Group [Member] | Office Lease Agreement [Member] | |||||||||
Lease term | 1 year | 13 months | |||||||
Payments for Rent | $ 1,087 | $ 680 | |||||||
CAAS IARRP and IAED Institutes [Member] | |||||||||
Related party transaction, amounts of transaction | $ 160,000 | ||||||||
Description of related party transaction | The term of the Agreement is for three years beginning November 20, 2015 and will expire on November 19, 2018. | ||||||||
RMB [Member] | Kiwa Baiao Bio-Tech (Beijing) Co., Ltd [Member] | Office Lease Agreement [Member] | |||||||||
Payments for Rent | ¥ | ¥ 77,867 | ||||||||
RMB [Member] | Kiwa Baiao Bio-Tech (Shenzhen) Co., Ltd [Member] | Apartment Lease Agreement [Member] | |||||||||
Payments for Rent | ¥ | ¥ 115,000 | ||||||||
RMB [Member] | CAAS IARRP and IAED Institutes [Member] | |||||||||
Related party transaction, amounts of transaction | $ 1,000,000 | ||||||||
Equity Purchase Agreement [Member] | |||||||||
Acquisition of purchase price | $ 2,200,000 | ||||||||
Equity Purchase Agreement [Member] | First Payment [Member] | |||||||||
Payment of purchase agreement | $ 147,423 | ||||||||
Equity Purchase Agreement [Member] | RMB [Member] | |||||||||
Acquisition of purchase price | ¥ | ¥ 15,000,000 | ||||||||
Equity Purchase Agreement [Member] | RMB [Member] | First Payment [Member] | |||||||||
Payment of purchase agreement | ¥ | 1,000,000 | ||||||||
Equity Purchase Agreement [Member] | RMB [Member] | Second Payment [Member] | |||||||||
Payment of purchase agreement | ¥ | 10,000,000 | ||||||||
Equity Purchase Agreement [Member] | RMB [Member] | Final Payment [Member] | |||||||||
Payment of purchase agreement | ¥ | ¥ 4,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Lease Payments (Details) | Jun. 30, 2017USD ($) |
2017 | $ 181,203 |
2018 | 259,286 |
2019 | 101,722 |
Thereafter | |
Beijing Office [Member] | |
2017 | 68,876 |
2018 | 45,917 |
2019 | |
Thereafter | |
Shenzhen Office [Member] | |
2017 | 101,722 |
2018 | 203,444 |
2019 | 101,722 |
Thereafter | |
USA Office [Member] | |
2017 | 10,605 |
2018 | 9,925 |
2019 | |
Thereafter |
Discontinued Operations (Detail
Discontinued Operations (Details Narrative) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Feb. 11, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |||
Foreign currency translation | 1 | ||
Discontinued operation net gain | $ 4,513,363 | $ 4,512,182 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | Jul. 19, 2017USD ($)$ / sharesshares | Jul. 18, 2017shares | Jul. 02, 2017USD ($) | Aug. 03, 2017USD ($) | Aug. 03, 2017CNY (¥) |
Agreement term | 2 years | ||||
Monthly lease payment | $ | $ 1,087 | ||||
Subscription receivable | $ | $ 487,627 | ||||
RMB [Member] | |||||
Subscription receivable | ¥ | ¥ 3,360,000 | ||||
Junwei Zheng [Member] | |||||
Shares issued during period restricted shares | shares | 245,000 | ||||
Shares issued price per share | $ / shares | $ 3 | ||||
Shares issued during period restricted, value | $ | $ 735,000 | ||||
Quanzhen Shen [Member] | |||||
Agreement term | 1 year | ||||
Shares issued during period, shares | shares | 49,000 | ||||
Quanzhen Shen [Member] | Common Stock Purchase Agreement [Member] | |||||
Shares issued during period restricted shares | shares | 98,000 | ||||
Shares issued price per share | $ / shares | $ 3 | ||||
Shares issued during period restricted, value | $ | $ 294,000 | ||||
Yuan Wang [Member] | |||||
Agreement term | 1 year | ||||
Shares issued during period, shares | shares | 39,000 |