Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Aug. 29, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NF Energy Saving Corp | |
Entity Central Index Key | 0001213660 | |
Amendment Flag | true | |
Amendment Description | This Amendment No.1 amends the Annual Report on Form 10-K of NF Energy Saving Corporation for the fiscal year ended December 31, 2018, originally filed with the Securities and Exchange Commission on August 30, 2019 (the "Original Form 10-K.") This Amendment No.1 is being filed because the Original Form10-K contained a number of inadvertent typographical errors in the XML files of the Consolidated Balance Sheets, the Consolidated Statements of Comprehensive Income (Loss), the Net Loss Per Share and Consolidated statements of Cash Flows. One typographical error in the consolidated statements of cash flows also appeared in the HTML version. None of these errors are material. In addition, we amended several hyperlinks and references in the Index to Exhibits. No other items of the Original Form 10-K are being amended and this Amendment does not reflect any events occurring after the filing of the Original Form 10-K. | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-K/A | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | FY | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 000-50155 | |
Entity Public Float | $ 10,287,619 | |
Entity Common Stock, Shares Outstanding | 8,073,289 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 17,860 | $ 282,154 |
Restricted cash | 179,496 | |
Accounts receivable, net | 1,340,509 | 12,217,790 |
Retention receivable | 545,940 | |
Inventories | 937,966 | 2,064,231 |
Prepayments and other receivables | 131,442 | 3,645,652 |
Total current assets | 2,607,273 | 18,755,767 |
Non-current assets: | ||
Property, plant and equipment, net | 17,958,136 | 19,987,116 |
Land use right, net | 2,460,668 | 2,664,054 |
Construction in progress | 24,722 | 26,128 |
TOTAL ASSETS | 23,050,799 | 41,433,065 |
Current liabilities: | ||
Accounts payable, trade | 2,782,182 | 3,976,334 |
Accounts payable trade-related parties | 416,547 | |
Short-term bank borrowings | 5,816,961 | 7,223,681 |
Amount due to a related party | 918,033 | 431,682 |
Other payables and accrued liabilities | 3,131,655 | 2,504,556 |
Total current liabilities | 13,065,378 | 14,136,253 |
TOTAL LIABILITIES | 13,065,378 | 14,136,253 |
Equity: | ||
Common stock, $0.001 par value; 50,000,000 shares authorized; 7,573,289 and 7,073,289 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 7,573 | 7,073 |
Additional paid-in capital | 12,555,325 | 12,055,825 |
Deferred compensation | ||
Statutory reserve | 2,227,634 | 2,227,634 |
Accumulated other comprehensive income (loss) | 1,788,302 | 2,613,829 |
(Accumulated losses) retained earnings | (6,443,102) | 10,343,407 |
Total NF Energy Saving Corporation stockholders' equity | 10,135,732 | 27,247,768 |
Non-controlling interest | (150,311) | 49,044 |
TOTAL EQUITY | 9,985,421 | 27,296,812 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 23,050,799 | $ 41,433,065 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 7,573,289 | 7,073,289 |
Common stock, shares outstanding | 7,573,289 | 7,073,289 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
REVENUES, NET | ||
Products | $ 6,362,724 | $ 8,267,174 |
Services | 179,508 | 240,999 |
Total revenues, net | 6,542,232 | 8,508,173 |
COST OF REVENUES | ||
Cost of products | 5,960,475 | 7,378,113 |
Cost of services | 122,403 | 213,546 |
Total cost of revenues | 6,082,878 | 7,591,659 |
GROSS PROFIT | 459,354 | 916,514 |
OPERATING EXPENSES | ||
Sales and marketing | 133,788 | 63,451 |
General and administrative | 16,119,299 | 2,048,134 |
Total operating expenses | 16,253,087 | 2,111,585 |
LOSS FROM OPERATIONS | (15,793,733) | (1,195,071) |
Other expense | ||
Other expense | (790,037) | (26,863) |
Interest income | 505 | 8 |
Interest expense | (416,412) | (353,745) |
Total other expense | (1,205,944) | (380,600) |
LOSS BEFORE INCOME TAXES | (16,999,677) | (1,575,671) |
Income tax expense | (117) | (2,744) |
NET LOSS | (16,999,794) | (1,578,415) |
Less: net loss attributable to non-controlling interest | (213,285) | (8,598) |
NET LOSS ATTRIBUTABLE TO NF ENERGY SAVING CORPORATION | $ (16,786,509) | $ (1,569,817) |
Net loss per share: | ||
-Basic and Diluted | $ (2.27) | $ (0.22) |
Weighted average common shares outstanding: | ||
-Basic and Diluted | 7,477,399 | 7,073,289 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
NET LOSS | $ (16,999,794) | $ (1,578,415) |
Other comprehensive loss: | ||
- Foreign currency adjustment loss | (825,527) | (1,948,838) |
COMPREHENSIVE LOSS | $ (17,825,321) | $ (3,766,417) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (16,999,794) | $ (1,578,415) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||
Depreciation and amortization | 1,038,836 | 944,012 |
Stock based compensation | 355,200 | |
Write off of property, plant and equipment | 14,635 | 37,493 |
Allowance for doubtful accounts | 14,736,278 | |
Change in operating assets and liabilities: | ||
Accounts and retention receivable | (846,288) | (4,814,628) |
Inventories | 1,055,168 | 2,746,175 |
Prepayments and other receivables | 720,899 | (316,621) |
Accounts payable, trade | (585,920) | 330,012 |
Other payables and accrued liabilities | 510,499 | 1,388,543 |
Income tax payable | 11,717 | |
Net cash used in operating activities | (343,970) | (908,229) |
Cash flows from financing activities: | ||
Issuance of common stocks | 500,000 | |
Amount due to related company | 769,522 | 16,503 |
Decrease in restricted cash | (1,058,258) | |
Proceeds from short-term bank borrowings | 6,047,190 | 6,955,736 |
Repayment on short-term bank borrowings | (6,047,190) | (5,919,775) |
Net cash provided by financing activities | 211,264 | 1,052,464 |
Effect on exchange rate change on cash and cash equivalents | 47,908 | 13,282 |
NET CHANGE IN CASH ,CASH EQUIVALENTS AND RESTRICTED CASH | (84,798) | 157,517 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR | 282,154 | 124,637 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | 17,860 | 282,154 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for income taxes | 117 | 2,744 |
Cash paid for interest | $ 388,623 | $ 353,745 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity - USD ($) | Common stock | Additional paid-in capital | Deferred compensation | Statutory reserve | Accumulated other comprehensive income | Retained earnings | Total NFEC stockholders’ equity | Non controlling interest | Total |
Balance at Dec. 31, 2016 | $ 7,073 | $ 12,055,825 | $ (355,200) | $ 2,227,634 | $ 858,502 | $ 11,913,224 | $ 26,707,058 | $ 26,707,058 | |
Balance (in shares) at Dec. 31, 2016 | 7,073,289 | ||||||||
Contribution from non-controlling interest | 56,204 | 56,204 | |||||||
Amortization of deferred compensation | 355,200 | 355,200 | 355,200 | ||||||
Foreign currency translation adjustment | 1,755,327 | 1,755,327 | 1,438 | 1,756,765 | |||||
Net loss | (1,569,817) | (1,569,817) | (8,598) | (1,578,415) | |||||
Balance at Dec. 31, 2017 | $ 7,073 | 12,055,825 | 2,227,634 | 2,613,829 | 10,343,407 | 27,247,768 | 49,044 | 27,296,812 | |
Balance (in shares) at Dec. 31, 2017 | 7,073,289 | ||||||||
Shares issued for cash | $ 500 | 499,500 | 500,000 | 500,000 | |||||
Shares issued for cash (in shares) | 500,000 | ||||||||
Foreign currency translation adjustment | (825,527) | (825,527) | 13,930 | (811,597) | |||||
Net loss | (16,786,509) | (16,786,509) | (213,285) | (16,999,794) | |||||
Balance at Dec. 31, 2018 | $ 7,573 | $ 12,555,325 | $ 2,227,634 | $ 1,788,302 | $ (6,443,102) | $ 10,135,732 | $ (150,311) | $ 9,985,421 | |
Balance (in shares) at Dec. 31, 2018 | 7,573,289 |
Organization and Business Backg
Organization and Business Background | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS BACKGROUND | 1. ORGANIZATION AND BUSINESS BACKGROUND NF Energy Saving Corporation (the “Company” or “NFEC”) was incorporated in the State of Delaware in the name of Galli Process, Inc. on October 31, 2000. On February 7, 2002, the Company changed its name to “Global Broadcast Group, Inc.” On November 12, 2004, the Company changed its name to “Diagnostic Corporation of America.” On March 15, 2007, the Company changed its name to “NF Energy Saving Corporation of America.” On August 24, 2009, the Company further changed its current name to “NF Energy Saving Corporation.” On October 1, 2010, the Company’s common stock was traded on Nasdaq global market. On March 7, 2012, and upon approval by NASDAQ, the common stock transferred from the Nasdaq Global Market to the Nasdaq Capital Market. On November 26, 2015, we formed a new company devoting to intelligent products was set up which is named by “Liaoning Nengfa Weiye Smart Valve Technology Co. Ltd”. (“Nengfa Smart Valve”). On March 8, 2017, “Liaoning Nengfa Weiye Smart Valve Technology Co. Ltd was named by “Liaoning Nengfa Tiefa Import and Export Co., Ltd.” in order to make further business activities. Nengfa Energy owns approximately 57% of the shares in Import & Export Company. For internal restructuring purposes, we formed a 100% owned subsidiary NF Energy Investment Corporation (“NF Investment”) in British Virgin Islands on June 22, 2018, which owns 100% of equity interests of NF Energy Equipment Limited (“NF Equipment”), a company incorporated in Hong Kong on August 6, 2018. 100% of equity interests of Nengfa Weiye were subsequently transferred to NF Equipment. Other than its equity interests in NF Equipment, NF Investment does not own any assets or conduct any operations. Other than its equity interests in Nengfa Weiye, NF Equipment does not own any assets or conduct any operations. The Company, through its subsidiaries, mainly operates in the energy technology business in the People’s of Republic of China (the “PRC”). The Company specializes in the provision of energy saving technology consulting, optimization design services, energy saving reconstruction of pipeline networks and contractual energy management services to China’s electric power, petrochemical, coal, metallurgy, construction, and municipal infrastructure development industries. The Company also engages in the manufacturing and sales of the energy-saving flow control equipment. All the customers are located in PRC. Description of subsidiaries Name Place of incorporation Principal activities and Particulars of issued/ Effective NF Energy Saving Investment Limited British Virgin Island, a limited liability company Investment holding US$1,000 100% NF Energy Equipment Limited Hong Kong, a limited liability company Investment holding HK$10,000 100% Liaoning Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”) The PRC, a limited liability company Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC US$5,000,000 100% Liaoning Nengfa Tiefa Import & Export Co.Ltd (“Nengfa Tiefa Import & Export”) The PRC, a limited liability company Development and production of hi-tech and automatic-intelligence valve products RMB877,192 57% NFEC and its subsidiaries are hereinafter referred to as (the “Company”). |
Going Concern Uncertainties
Going Concern Uncertainties | 12 Months Ended |
Dec. 31, 2018 | |
Going Concern Uncertainties [Abstract] | |
Going Concern Uncertainties | 2. GOING CONCERN UNCERTAINTIES The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As reflected in the accompanying consolidated financial statements, the Company incurred a significant net loss of $17 million for the year ended December 31, 2018, an accumulated deficit of $6,443,102, an outflow cash of $343,970 from operating activities and a negative working capital of $10,458,105 at December 31, 2018. In addition, the Company continues to generate operating loss and have limited cash flow from its operations. Management believes these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months. The continuation of the Company as a going concern through the next twelve months is dependent upon (1) the continued financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as they become due, and (2) further implement management’s business plan to extend its operations and generate sufficient revenues to meet its obligations. While the Company believes in the viability of its strategy to increase sales volume and in its ability to raise additional funds, there can be neither no assurances to that effect, nor no assurance that the Company will be successful in securing sufficient funds to sustain the operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES • Basis of presentation These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). • Use of estimates In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates. • Basis of consolidation The consolidated financial statements include the financial statements of NFEC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation. • Cash and cash equivalents Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. • Restricted cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in restricted cash account on the Company’s consolidated balance sheet. The Company’s restricted cash balance is related to a contract performance guarantee bond. The December 31, 2018 and 2017 balances were $179,496 and $0, respectively. • Accounts receivable and allowance for doubtful accounts Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer’s financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of December 31, 2018 and 2017, the allowance for doubtful accounts was $12,269,647 and $760,164, respectively. • Retention receivable Retention receivable is the amount withheld by a customer based upon 5-10% of the contract value, until a product warranty is expired. The warranty period is usually 12 months. • Inventories Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. The Company reviews historical sales activity quarterly to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of December 31, 2018 and 2017, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs. • Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected Residual value Building 30 – 50 years 5% Plant and machinery 10 – 20 years 5% Furniture, fixture and equipment 5 – 8 years 5% Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. • Land use right All lands in the PRC are owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company’s land purchases in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059. • Construction in progress Construction in progress is stated at cost, which includes acquisition of land use rights, cost of construction, purchases of plant and equipment and other direct costs attributable to the construction of a manufacturing facility in Yinzhou District Industrial Park, Tieling City, Liaoning Province, PRC. Construction in progress is not depreciated until such time as the assets are completed and put into operational use. No capitalized interest is incurred during the period of construction. • Impairment of long-lived assets In accordance with the provisions of ASC Topic 360, “ Impairment or Disposal of Long-Lived Assets • Revenue recognition On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, Revenue Recognition. The adoption had no material impact on the Company’s consolidated financial statements and there was no adjustment to the beginning retained earnings on January 1, 2018. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods and services, net of value-added tax. The Company determines revenue recognition through the following steps: • Identify the contract with a customer; • Identify the performance obligations in the contract; • Determine the transaction price; • Allocate the transaction price to the performance obligations in the contract; and • Recognize revenue when (or as) the entity satisfies a performance obligation. • Cost of revenue Cost of revenue consists primarily of material costs, direct labor, depreciation, and manufacturing overhead, which are directly attributable to the manufacture of products and the rendering of services or projects. Shipping and handling costs, associated with the distribution of finished products to customers, are borne by the customers. • Comprehensive income ASC Topic 220, “Comprehensive Income”, • Income taxes Income taxes are determined in accordance with the provisions of ASC Topic 740, “ Income Taxes ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the years ended December 31, 2018 and 2017, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2018, the Company did not have any significant unrecognized uncertain tax positions. The Company conducts the majority of its businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by a foreign tax authority. • Product warranty Under the terms of the contracts, the Company offers its customers with a free product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5-10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns or claims where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranty has been provided in the result of operations for the year ended December 31, 2017. However, due to limited collection from its receivables during the year ended December 31, 2018 and the subsequent period, the Company reported a reserve of $942,382 for the receivable withheld by its customers for product warranty. • Net loss per share The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” • Foreign currencies translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is the United States Dollar (“US$”). The Company’s subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan (“RMB”), which is the functional currency as being the primary currency of the economic environment in which these entities operate. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement”, exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective year: 2018 2017 Year-end RMB:US$1 exchange rate 6.8764 6.5064 Annual average RMB:US$1 exchange rate 6.6146 6.7570 • Retirement plan costs Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying consolidated statements of operation as the related employee service is provided. • Related parties Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. • Segment reporting ASC Topic 280, “ Segment Reporting • Fair value of financial instruments The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and convertible promissory notes): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments. Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation under finance lease and short-term bank borrowing approximate the carrying amount. The Company also follows the guidance of the ASC Topic 820-10, “ Fair Value Measurements and Disclosures • Level 1 • Level 2: • Level 3: Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. • Recent accounting pronouncements In January 2017, the Financial Accounting Standard Board (“FASB”) issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued Accounting Standard Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820) Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
Accounts and Retention Receivab
Accounts and Retention Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Accounts And Retention Receivable [Abstract] | |
ACCOUNTS AND RETENTION RECEIVABLE | 4. ACCOUNTS AND RETENTION RECEIVABLE The majority of the Company's sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required. Based upon the aforementioned criteria, the Company provided an allowance $12,007,545 and $0 for the years ended December 31, 2018 and 2017. As of December 31, 2018 2017 Accounts receivable, cost $ 13,610,156 $ 12,977,954 Retention receivable, cost — 545,940 13,610,156 13,523,894 Less: allowance for doubtful accounts (12,269,647 ) (760,164 ) Accounts and retention receivable, net $ 1,340,509 $ 12,763,730 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventory, Net [Abstract] | |
INVENTORIES | 5. INVENTORIES Inventories consisted of the following: As of December 31, 2018 2017 Raw materials $ 519,341 $ 499,213 Work-in-process 322,132 555,694 Finished goods 96,493 1,009,324 $ 937,966 $ 2,064,231 For the years ended December 31, 2018 and 2017, no allowance for obsolete inventories was recorded by the Company. Finished goods are expected to be delivered to the customer in the next twelve months. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | 6. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: As of December 31, 2018 2017 Building $ 20,050,074 $ 20,050,074 Plant and machinery 6,075,591 6,172,396 Furniture, fixture and equipment 66,000 66,000 Foreign translation difference (559,148 ) 816,833 25,632,517 27,105,303 Less: accumulated depreciation (8,029,499 ) (7,053,055 ) Less: foreign translation difference 355,118 (65,132 ) Property, plant and equipment, net $ 17,958,136 $ 19,987,116 Depreciation expense for the years ended December 31, 2018 and 2017 were $976,444 and $882,935. |
Land Use Right
Land Use Right | 12 Months Ended |
Dec. 31, 2018 | |
Land Use Rights [Abstract] | |
LAND USE RIGHT | 7. LAND USE RIGHT Land use right consisted of the following: As of December 31, 2018 2017 Land use right, at cost $ 3,044,062 $ 3,044,062 Less: accumulated amortization (582,661 ) (520,269 ) 2,461,401 2,523,793 Add: foreign translation difference (733 ) 140,261 Land use right, net $ 2,460,668 $ 2,664,054 Amortization expense for the years ended December 31, 2018 and 2017 were $62,392 and $61,077, respectively. The estimated amortization expense on the land use right in the next five years and thereafter is as follows: Year ending December 31: 2019 $ 60,016 2020 60,016 2021 60,016 2022 60,016 2023 60,016 Thereafter 2,160,588 Total: $ 2,460,668 |
Short-Term Bank Borrowings
Short-Term Bank Borrowings | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
SHORT-TERM BANK BORROWINGS | 8. SHORT-TERM BANK BORROWINGS Short-term bank borrowings consist of the following: As of December 31, 2018 2017 Payable to financial institutions in the PRC: Demand bank notes: Equivalent to RMB 7,000,000, due March 19, 2018, which is guaranteed by its vendor $ — $ 1,075,867 Equivalent to RMB 40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 19, 2018, which is guaranteed by its vendor — 6,147,814 Equivalent to RMB 40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 18, 2019, which is guaranteed by its related parties and used buildings and land use rights as collateral. The loan was fully repaid on the due date. 5,816,961 — Total short-term bank borrowings $ 5,816,961 $ 7,223,681 The effective Bank of China Benchmark Lending rate was 4.76% and 4.35% per annum for the years ended December 31, 2018 and 2017. |
Amounts Due To Related Parties
Amounts Due To Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
AMOUNT DUE TO A RELATED PARTY | 9. AMOUNTS DUE TO RELATED PARTIES As of December 31, 2018, the Company reported a trade payable of $416,547 due to Liaoning Bainianye New Energy Utilization Co., Ltd. (“Bainianye New Energy”), directly controlled by Ms. Li Hua Wang (the Company’s former CFO) and Mr. Gang Li (the Company’s former CEO), which was unsecured, interest-free and had no fixed repayment term. During the year ended December 31, 2018, the Company did not have inventory purchase transaction with Bainianye New Energy. In addition, as of December 31, 2018, the Company reported related party payables of $918,033 mainly due to Ms. Li Hua Wang (the Company’s former CFO) of $606,194, Mr. Haibo Gong (Import & Export Company’s executive director) of $162,463, and Bainianye New Energy of $174,256. The related party payable was for daily operating purpose with unsecured, interest-free and had no fixed repayment term. As of December 31, 2017, the amount due to a related party represented temporary advances made by the Company’s major stockholder, Pelaria International Ltd, which is controlled by Ms. Li Hua Wang and Mr. Gang Li (a Company director), which was unsecured, interest-free with no fixed repayment term. Imputed interest on this amount is considered insignificant. |
Other Payables and Accrued Liab
Other Payables and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
OTHER PAYABLES AND ACCRUED LIABILITIES | 10. OTHER PAYABLES AND ACCRUED LIABILITIES Other payables and accrued liabilities consisted of the following: As of December 31, 2018 2017 Customer deposits $ 356,799 $ 513,382 Value-added tax payable 933,691 627,290 Accrued operating expenses 847,106 506,944 Other payables 982,788 856,940 $ 3,120,384 $ 2,504,556 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | 11. STOCKHOLDERS' EQUITY On March 12, 2018, the Company issued 500,000 shares of its Common Stock, at the price of $1.00 per share for aggregate consideration of $500,000, to Mr. Yongquan Bi, our Chairman and Chief Executive Officer. As of December 31, 2018 and 2017, the Company had a total of 7,573,289 and 7,073,289 shares of its common stock issued and outstanding, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 12. INCOME TAXES For the years ended December 31, 2018 and 2017, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following: For the years ended December 31, 2018 2017 Tax jurisdiction from: – Local $ (212,582 ) $ (560,363 ) – Foreign (16,782,095 ) (1,015,308 ) Loss before income taxes $ (16,994,677 ) $ (1,575,671 ) The provision for income taxes consisted of the following: For the years ended December 31, 2018 2017 Current: – Local $ — $ — – Foreign 117 2,744 Deferred: – Local — — – Foreign — — Income tax expense $ 117 $ 2,744 The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company operates in various countries: United States of America and the PRC that are subject to taxes in the jurisdictions in which they operate, as follows: United States of America NFEC is registered in the State of Delaware and is subject to the tax laws of United States of America. The Company has no tax position at December 31, 2018 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company does not recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the period presented. The Company had no accruals for interest and penalties at December 31, 2018. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended activities. As of December 31, 2018, the operations in the United States of America incurred $4,134,645 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2038, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $868,275 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. The PRC The Company’s subsidiaries operating in the PRC are subject to the Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate of 25%. The reconciliation of income tax rate to the effective income tax rate for the years ended December 31, 2018 and 2017 is as follows: For the years ended December 31, 2018 2017 Loss before income taxes from PRC operation $ (16,782,095 ) $ (1,015,308 ) Statutory income tax rate 25 % 25 % Income tax expense at statutory rate (4,195,574 ) (253,827 ) Tax effect of non-deductible items 4,195,691 256,571 Income tax expense $ 117 $ 2,744 The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2018 and 2017: As of December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards United States – current rate $ 868,275 $ 1,333,501 United States – effect of change in statutory rate — (509,868 ) Less: valuation allowance (868,275 ) (823,633 ) Deferred tax assets $ — $ — Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $868,275 as of December 31, 2018. In 2018, the valuation allowance increased by $44,642, primarily relating to net operating loss carryforwards from the local tax regime. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Net loss per share: | |
NET LOSS PER SHARE | 13. NET LOSS PER SHARE Basic net loss per share is computed using the weighted average number of common shares outstanding during the year. The dilutive effect of potential common shares outstanding is included in diluted net loss per share. The following table sets forth the computation of basic and diluted net loss per share for the years ended December 31, 2018 and 2017: For the years ended December 31, 2018 2017 Net loss attributable to common shareholders $ (16,999,794 ) $ (1,578,415 ) Weighted average common shares outstanding – Basic and diluted 7,477,399 7,073,289 Net loss per share – Basic and diluted $ (2.27 ) $ (0.22 ) |
China Contribution Plan
China Contribution Plan | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure Text Block Supplement [Abstract] | |
CHINA CONTRIBUTION PLAN | 14. CHINA CONTRIBUTION PLAN Under the PRC Law, full-time employees of its subsidiaries of the Company in the PRC are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a China government-mandated multi-employer defined contribution plan. These benefits are required to accrue for, based on certain percentages of the employees' salaries. The total contributions made for such employee benefits were approximately $138,000 and $167,000 for the years ended December 31, 2018 and 2017, respectively. |
Statutory Reserves
Statutory Reserves | 12 Months Ended |
Dec. 31, 2018 | |
STATUTORY RESERVES [Abstract] | |
STATUTORY RESERVES | 15. STATUTORY RESERVES Under the PRC Law the Company's subsidiaries are required to make appropriations to the statutory reserve based on after-tax net earnings and determined in accordance with generally accepted accounting principles of the People's Republic of China (the "PRC GAAP"). Appropriation to the statutory reserve should be at least 10% of the after-tax net income until the reserve is equal to 50% of the registered capital. The statutory reserve is established for the purpose of providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation. |
Concentrations of Risk
Concentrations of Risk | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF RISK | 16. CONCENTRATIONS OF RISK The Company is exposed to the following concentrations of risk: (a) Major customers For the year ended December 31, 2018, there was one customer who represented more than 10% of the Company's revenues. This customer accounted for 11% of the Company's revenues amounting to $623,187 with $695,374 of accounts receivable. For the year ended December 31, 2017, one customer represented more than 10% of the Company's revenues. This customer accounted for 48% of the Company's revenues amounting to $3,807,773 with $8,523,860 of accounts receivable. All customers are located in the PRC. (b) Major vendors For the year ended December 31, 2018, the vendors who accounted for 10% or more of the Company's purchases and its outstanding accounts payable balances as at year-end dates, are presented as follows: Year ended December 31, 2018 December 31, Vendor Purchases Percentage of Accounts Vendor A $ 1,006,974 27% $ 746,813 Vendor B 418,753 11% 3,450 Total: $ 1,425,727 38% $ 750,263 For the year ended December 31, 2017, there were no vendors who accounted for 10% or more of the Company's purchases. (c) Credit risk Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. (d) Interest rate risk As the Company has no significant interest-bearing assets, the Company's income and operating cash flows are substantially independent of changes in market interest rates. The Company's interest-rate risk arises from short-term bank borrowings. The Company manages interest rate risk by varying the issuance and maturity dates variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of December 31, 2018 and 2017, short-term bank borrowings were at fixed rates. (e) Exchange rate risk The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk. (f) Economic and political risks The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. The Company's operations in the PRC are subject to special considerations. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments [Abstract] | |
COMMITMENTS | 17. COMMITMENTS As of December 31, 2018 and 2017, there were no commitments involved. |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Contingencies [Abstract] | |
Contingencies | 18. CONTINGENCIES None |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS In accordance with ASC Topic 855, “ Subsequent Events On January 31 and February 1, 2019, the Company entered into two short-term loan agreements with Mr. Gang Li, the director and former CEO of the Company, to borrow RMB 4.5 million and RMB 5 million, respectively. Both loans are guaranteed by one of the Company’s related parties and 43% non-controlling interest of Import & Export Company, Nengfa Weiye Tieling Valve Joint-stock Co. Ltd. On April 11, 2019, the Company entered into an Agreement with LASTING WISDOM HOLDINGS LIMITED, a company organized under the laws of the British Virgin Islands, PUKUNG LIMITED, a company organized under the laws of Hong Kong, BEIJING XIN RONG XIN INDUSTRIAL DEVELOPMENT CO., LTD., a company organized under the laws of the PRC, Boqi Pharmacy and several additional individual sellers. The aggregate purchase price for the shares of Boqi Pharmacy’s parent consists of cash consideration of RMB 40,000,000 and up to 1,500,000 shares of our common stock. The purchase price is subject to post-closing adjustments (contingent on fair market value of the acquired companies). This transaction is anticipated to close during the third or fourth quarter of 2019. The Company plans to raise RMB 40,000,000 in equity to fund the acquisition cost. On April 22, 2019, one of NF Energy’s suppliers filed a lawsuit against NF Energy for unpaid outstanding payable of RMB 1,278,181.8. On May 24, 2019, the parties entered into a court-supervised settlement where NF Energy agreed to pay the supplier RMB 1.26 million. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | • Basis of presentation These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). |
Use of estimates | • Use of estimates In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates. |
Basis of consolidation | • Basis of consolidation The consolidated financial statements include the financial statements of NFEC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation. |
Cash and cash equivalents | • Cash and cash equivalents Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. |
Restricted cash | • Restricted cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in restricted cash account on the Company's consolidated balance sheet. The Company's restricted cash balance is related to a contract performance guarantee bond. The December 31, 2018 and 2017 balances were $179,496 and $0, respectively. |
Accounts receivable and allowance for doubtful accounts | • Accounts receivable and allowance for doubtful accounts Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer's financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of December 31, 2018 and 2017, the allowance for doubtful accounts was $12,269,647 and $760,164, respectively. |
Retention receivable | • Retention receivable Retention receivable is the amount withheld by a customer based upon 5-10% of the contract value, until a product warranty is expired. The warranty period is usually 12 months. |
Inventories | • Inventories Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. The Company reviews historical sales activity quarterly to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of December 31, 2018 and 2017, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs. |
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. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected Residual value Building 30 – 50 years 5% Plant and machinery 10 – 20 years 5% Furniture, fixture and equipment 5 – 8 years 5% Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. |
Land use rights | • Land use right All lands in the PRC are owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company's land purchases in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059. |
Construction in progress | • Construction in progress Construction in progress is stated at cost, which includes acquisition of land use rights, cost of construction, purchases of plant and equipment and other direct costs attributable to the construction of a manufacturing facility in Yinzhou District Industrial Park, Tieling City, Liaoning Province, PRC. Construction in progress is not depreciated until such time as the assets are completed and put into operational use. No capitalized interest is incurred during the period of construction. |
Impairment of long-lived assets | • Impairment of long-lived assets In accordance with the provisions of ASC Topic 360, " Impairment or Disposal of Long-Lived Assets |
Revenue recognition | • Revenue recognition On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historic accounting under ASC 605, Revenue Recognition. The adoption had no material impact on the Company's consolidated financial statements and there was no adjustment to the beginning retained earnings on January 1, 2018. Under ASC 606, revenue is recognized when control of the promised goods and services is transferred to the Company's customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods and services, net of value-added tax. The Company determines revenue recognition through the following steps: • Identify the contract with a customer; • Identify the performance obligations in the contract; • Determine the transaction price; • Allocate the transaction price to the performance obligations in the contract; and • Recognize revenue when (or as) the entity satisfies a performance obligation. |
Cost of revenue | • Cost of revenue Cost of revenue consists primarily of material costs, direct labor, depreciation, and manufacturing overhead, which are directly attributable to the manufacture of products and the rendering of services or projects. Shipping and handling costs, associated with the distribution of finished products to customers, are borne by the customers. |
Comprehensive income | • Comprehensive income ASC Topic 220, "Comprehensive Income", |
Income taxes | • Income taxes Income taxes are determined in accordance with the provisions of ASC Topic 740, " Income Taxes ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the years ended December 31, 2018 and 2017, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2018, the Company did not have any significant unrecognized uncertain tax positions. The Company conducts the majority of its businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by a foreign tax authority. |
Product warranty | • Product warranty Under the terms of the contracts, the Company offers its customers with a free product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5-10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns or claims where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranty has been provided in the result of operations for the year ended December 31, 2017. However, due to limited collection from its receivables during the year ended December 31, 2018 and the subsequent period, the Company reported a reserve of $942,382 for the receivable withheld by its customers for product warranty. |
Net loss per share | • Net loss per share The Company calculates net loss per share in accordance with ASC Topic 260, "Earnings per Share." |
Foreign currencies translation | • Foreign currencies translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in the PRC maintain their books and records in their local currency, the Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, " Translation of Financial Statement", Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective year: 2018 2017 Year-end RMB:US$1 exchange rate 6.8764 6.5064 Annual average RMB:US$1 exchange rate 6.6146 6.7570 |
Retirement plan costs | • Retirement plan costs Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying consolidated statements of operation as the related employee service is provided. |
Related parties | • Related parties Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. |
Segment reporting | • Segment reporting ASC Topic 280, " Segment Reporting |
Fair value of financial instruments | • Fair value of financial instruments The carrying value of the Company's financial instruments (excluding short-term bank borrowing and convertible promissory notes): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments. Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation under finance lease and short-term bank borrowing approximate the carrying amount. The Company also follows the guidance of the ASC Topic 820-10, " Fair Value Measurements and Disclosures • Level 1 • Level 2: • Level 3: Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Recent accounting pronouncements | • Recent accounting pronouncements In January 2017, the Financial Accounting Standard Board ("FASB") issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting In August 2018, the FASB issued Accounting Standard Update ("ASU") No. 2018-13, Fair Value Measurement (Topic 820) Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's consolidated financial statements upon adoption. |
Organization and Business Bac_2
Organization and Business Background (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Subsidiaries | Name Place of incorporation Principal activities and Particulars of issued/ Effective NF Energy Saving Investment Limited British Virgin Island, a limited liability company Investment holding US$1,000 100% NF Energy Equipment Limited Hong Kong, a limited liability company Investment holding HK$10,000 100% Liaoning Nengfa Weiye Energy Technology Co. Ltd Nengfa Energy The PRC, a limited liability company Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC US$5,000,000 100% Liaoning Nengfa Tiefa Import & Export Co.Ltd (“Nengfa Tiefa Import & Export”) The PRC, a limited liability company Development and production of hi -tech -intelligence RMB877,192 57% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Expected Useful Lives | Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected Residual value Building 30 – 50 years 5% Plant and machinery 10 – 20 years 5% Furniture, fixture and equipment 5 – 8 years 5% |
Exchange Rates | Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective year: 2018 2017 Year-end RMB:US$1 exchange rate 6.8764 6.5064 Annual average RMB:US$1 exchange rate 6.6146 6.7570 |
Accounts and Retention Receiv_2
Accounts and Retention Receivable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounts And Retention Receivable [Abstract] | |
Accounts and Retention Receivable | As of December 31, 2018 2017 Accounts receivable, cost $ 13,610,156 $ 12,977,954 Retention receivable, cost — 545,940 13,610,156 13,523,894 Less: allowance for doubtful accounts (12,269,647 ) (760,164 ) Accounts and retention receivable, net $ 1,340,509 $ 12,763,730 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory, Net [Abstract] | |
INVENTORIES | Inventories consisted of the following: As of December 31, 2018 2017 Raw materials $ 519,341 $ 499,213 Work-in-process 322,132 555,694 Finished goods 96,493 1,009,324 $ 937,966 $ 2,064,231 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment consisted of the following: As of December 31, 2018 2017 Building $ 20,050,074 $ 20,050,074 Plant and machinery 6,075,591 6,172,396 Furniture, fixture and equipment 66,000 66,000 Foreign translation difference (559,148 ) 816,833 25,632,517 27,105,303 Less: accumulated depreciation (8,029,499 ) (7,053,055 ) Less: foreign translation difference 355,118 (65,132 ) Property, plant and equipment, net $ 17,958,136 $ 19,987,116 |
Land Use Right (Tables)
Land Use Right (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Land Use Rights [Abstract] | |
Schedule Of Land Use Right | Land use right consisted of the following: As of December 31, 2018 2017 Land use right, at cost $ 3,044,062 $ 3,044,062 Less: accumulated amortization (582,661 ) (520,269 ) 2,461,401 2,523,793 Add: foreign translation difference (733 ) 140,261 Land use right, net $ 2,460,668 $ 2,664,054 |
Estimated Amortization Expense on Land Use Right | The estimated amortization expense on the land use right in the next five years and thereafter is as follows: Year ending December 31: 2019 $ 60,016 2020 60,016 2021 60,016 2022 60,016 2023 60,016 Thereafter 2,160,588 Total: $ 2,460,668 |
Short-Term Bank Borrowings (Tab
Short-Term Bank Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Short-Term Bank Borrowings | Short-term bank borrowings consist of the following: As of December 31, 2018 2017 Payable to financial institutions in the PRC: Demand bank notes: Equivalent to RMB 7,000,000, due March 19, 2018, which is guaranteed by its vendor $ — $ 1,075,867 Equivalent to RMB 40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 19, 2018, which is guaranteed by its vendor — 6,147,814 Equivalent to RMB 40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due March 18, 2019, which is guaranteed by its related parties and used buildings and land use rights as collateral. The loan was fully repaid on the due date. 5,816,961 — Total short-term bank borrowings $ 5,816,961 $ 7,223,681 |
Other Payables and Accrued Li_2
Other Payables and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Other Payables and Accrued Liabilities | Other payables and accrued liabilities consisted of the following: As of December 31, 2018 2017 Customer deposits $ 356,799 $ 513,382 Value-added tax payable 933,691 627,290 Accrued operating expenses 847,106 506,944 Other payables 982,788 856,940 $ 3,120,384 $ 2,504,556 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Local and Foreign Components of Income (Loss) before Income Taxes | For the years ended December 31, 2018 and 2017, the local ("United States of America") and foreign components of loss before income taxes were comprised of the following: Years ended December 31, 2018 2017 Tax jurisdiction from: – Local $ (212,582 ) $ (560,363 ) – Foreign (16,782,095 ) (1,015,308 ) Loss before income taxes $ (16,994,677 ) $ (1,575,671 ) |
Provision for Icome Taxes | The provision for income taxes consisted of the following: Years ended December 31, 2018 2017 Current: – Local $ — $ — – Foreign 117 2,744 Deferred: – Local — — – Foreign — — Income tax expense $ 117 $ 2,744 |
Reconciliation of Income Tax Rate to Effective Income Tax Rate | The reconciliation of income tax rate to the effective income tax rate for the years ended December 31, 2018 and 2017 is as follows: Years ended December 31, 2018 2017 Loss before income taxes from PRC operation $ (16,782,095 ) $ (1,015,308 ) Statutory income tax rate 25 % 25 % Income tax expense at statutory rate (4,195,574 ) (253,827 ) Tax effect of non-deductible items 4,195,691 256,571 Income tax expense $ 117 $ 2,744 |
Schedule of Deferred Tax Asset and Liabilities | The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2018 and 2017: As of December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards United States – current rate $ 868,275 $ 1,333,501 United States – effect of change in statutory rate — (509,868 ) Less: valuation allowance (868,275 ) (823,633 ) Deferred tax assets $ — $ — |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Net loss per share: | |
Schedule of Earnings Per Share, Basic and Diluted | For the years ended December 31, 2018 2017 Net loss attributable to common shareholders $ (16,999,794 ) $ (1,578,415 ) Weighted average common shares outstanding – Basic and diluted 7,477,399 7,073,289 Net loss per share – Basic and diluted $ (2.27 ) $ (0.22 ) |
Concentrations of Risk (Tables)
Concentrations of Risk (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations Risk of Company's Purchases and Outstanding Accounts Payable Balances | For the year ended December 31, 2018, the vendors who accounted for 10% or more of the Company's purchases and its outstanding accounts payable balances as at year-end dates, are presented as follows: Year ended December 31, 2018 December 31, Vendor Purchases Percentage of Accounts Vendor A $ 1,006,974 27% $ 746,813 Vendor B 418,753 11% 3,450 Total: $ 1,425,727 38% $ 750,263 |
Organization and Business Bac_3
Organization and Business Background (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
NF Energy Saving Investment Limited [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of incorporation and kind of legal entity | British Virgin Island, a limited liability company |
Principal activities and place of operation | Investment holding |
Particulars of issued/registered share capital | $ 1,000 |
Effective interest held | 100.00% |
NF Energy Equipment Limited [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of incorporation and kind of legal entity | Hong Kong, a limited liability company |
Principal activities and place of operation | Investment holding |
Particulars of issued/registered share capital | $ 10,000 |
Effective interest held | 100.00% |
Liaoning Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Place of incorporation and kind of legal entity | The PRC, a limited liability company |
Principal activities and place of operation | Development and production of hi-tech and automatic-intelligence valve products |
Particulars of issued/registered share capital | $ 877,192 |
Effective interest held | 57.00% |
Liaoning Nengfa Tiefa Import & Export Co.Ltd (“Nengfa Tiefa Import & Export”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Principal activities and place of operation | Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC |
Particulars of issued/registered share capital | $ 5,000,000 |
Effective interest held | 100.00% |
Going Concern Uncertainties (De
Going Concern Uncertainties (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Going Concern Uncertainties [Abstract] | ||
Net loss | $ (16,786,509) | $ (1,569,817) |
Accumulated deficit | 6,443,102 | |
Negative working capital | $ 10,500,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Dec. 31, 2018 | Dec. 31, 2017 |
Summary Of Significant Accounting Policies | ||
Year-end RMB:US$1 exchange rate | 6.8764 | 6.5064 |
Annual average RMB:US$1 exchange rate | 6.6146 | 6.7570 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies [Line Items] | ||
Minimum likelihood of tax benefits being realized upon settlement | 50.00% | |
Warrant Period | 12 months | |
Allowance for doubtful accounts | $ 12,269,647 | $ 760,164 |
Restricted cash balance | 1,794,960 | $ 0 |
Product warranty | $ 9,423,820 | |
Maximum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Retention receivable percentage | 10.00% | |
Minimum [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Retention receivable percentage | 5.00% | |
Use Rights [Member] | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Finite lived intangible assets, useful Life | 50 years | |
Finite lived intangible assets amortization period | 2059 |
Accounts and Retention Receiv_3
Accounts and Retention Receivable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts And Retention Receivable [Abstract] | ||
Accounts receivable, cost | $ 13,610,156 | $ 12,977,954 |
Retention receivable, cost | 545,940 | |
Accounts and retention receivable gross | 13,610,156 | 13,523,894 |
Less: allowance for doubtful accounts | (12,269,647) | (760,164) |
Accounts and retention receivable, net | $ 1,340,509 | $ 12,763,730 |
Accounts and Retention Receiv_4
Accounts and Retention Receivable (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts and Retention Receivable (Textual) | ||
Provision for doubtful accounts | $ 14,736,278 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 519,341 | $ 499,213 |
Work-in-process | 322,132 | 555,694 |
Finished goods | 96,493 | 1,009,324 |
Total inventory | $ 937,966 | $ 2,064,231 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Building | $ 20,050,074 | $ 20,050,074 |
Plant and machinery | 6,075,591 | 6,172,396 |
Furniture, fixture and equipment | 66,000 | 66,000 |
Foreign translation difference | (559,148) | 816,833 |
Property, plant and equipment, gross | 25,632,517 | 27,105,303 |
Less: accumulated depreciation | (8,029,499) | (7,053,055) |
Less: foreign translation difference | 355,118 | (65,132) |
Property, plant and equipment, net | $ 17,958,136 | $ 19,987,116 |
Property, Plant and Equipment_3
Property, Plant and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment (Textual) | ||
Depreciation expense | $ 976,444 | $ 882,935 |
Land Use Right (Details)
Land Use Right (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Land Use Rights [Abstract] | ||
Land use right, at cost | $ 3,044,062 | $ 3,044,062 |
Less: accumulated amortization | (582,661) | (520,269) |
Finite-lived intangible assets after accumulated gross | 2,461,401 | 2,523,793 |
Add: foreign translation difference | (733) | 140,261 |
Land use right, net | $ 2,460,668 | $ 2,664,054 |
Land Use Right (Details 1)
Land Use Right (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Land Use Right [Abstract] | ||
2019 | $ 60,016 | |
2020 | 60,016 | |
2021 | 60,016 | |
2022 | 60,016 | |
2023 | 60,016 | |
Thereafter | 60,016 | |
Total: | $ 2,460,668 | $ 2,664,054 |
Land Use Right (Details Textual
Land Use Right (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Land Use Right [Abstract] | ||
Amortization expense | $ 62,392 | $ 61,077 |
Short-Term Bank Borrowings (Det
Short-Term Bank Borrowings (Detail) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) |
Short-Term Bank Borrowings (Textual) | |||
Total short-term bank borrowings | $ 5,816,961 | $ 7,223,681 | |
Vendor Guarantee One [Member] | Short Term Loan [Member] | |||
Short-Term Bank Borrowings (Textual) | |||
Total short-term bank borrowings | 1,075,867 | ||
Guarantee Type Other [Member] | Short Term Loan One [Member] | |||
Short-Term Bank Borrowings (Textual) | |||
Total short-term bank borrowings | ¥ 6,147,814 | ||
Guarantee Type Related party [Member] | Short Term Loan One [Member] | |||
Short-Term Bank Borrowings (Textual) | |||
Total short-term bank borrowings | $ 5,816,961 |
Short-Term Bank Borrowings (D_2
Short-Term Bank Borrowings (Detail Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Short-term Debt [Line Items] | ||
Effective interest rate, per annum | 4.76% | 4.35% |
Guarantee Type Other [Member] | Short Term Loan [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Maturity Date | Mar. 19, 2018 | Mar. 19, 2018 |
Guarantee Type Other [Member] | Short Term Loan One [Member] | ||
Short-term Debt [Line Items] | ||
Short-term bank borrowings | $ 40,000,000 | $ 40,000,000 |
Percentage of face value as handling fee | 128.00% | 128.00% |
Vendor Guarantee One [Member] | Short Term Loan [Member] | ||
Short-term Debt [Line Items] | ||
Short-term bank borrowings | $ 7,000,000 | $ 7,000,000 |
Vendor Guarantee One [Member] | Short Term Loan One [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Maturity Date | Mar. 19, 2018 | Mar. 19, 2018 |
Guarantee Type Related party [Member] | Short Term Loan One [Member] | ||
Short-term Debt [Line Items] | ||
Short-term bank borrowings | $ 40,000,000 | $ 40,000,000 |
Percentage of face value as handling fee | 128.00% | 128.00% |
Debt Instrument, Maturity Date | Mar. 18, 2020 | Mar. 18, 2020 |
Amounts Due To Related Parties
Amounts Due To Related Parties (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Amounts Due To Related Parties (Textual) | ||
Amounts due to related parties | $ 416,547 | |
Due to related party | 918,033 | $ 431,682 |
Ms. Li Hua Wang [Member] | ||
Amounts Due To Related Parties (Textual) | ||
Due to related party | 606,194 | |
Mr. Haibo Gong [Member] | ||
Amounts Due To Related Parties (Textual) | ||
Due to related party | 162,463 | |
Bainianye New Energy [Member] | ||
Amounts Due To Related Parties (Textual) | ||
Due to related party | $ 174,256 |
Other Payables and Accrued Li_3
Other Payables and Accrued Liabilities (Detail) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Disclosure Other Payables and Accrued Liabilities [Abstract] | ||
Customer deposits | $ 356,799 | $ 513,382 |
Value-added tax payable | 933,691 | 627,290 |
Accrued operating expenses | 847,106 | 506,944 |
Other payable | 982,788 | 856,940 |
Other payables and accrued liabilities | $ 3,131,655 | $ 2,504,556 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - USD ($) | Mar. 12, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Schedule of Capitalization, Equity [Line Items] | |||
Common stock, shares issued | 7,573,289 | 7,073,289 | |
Common stock, shares outstanding | 7,573,289 | 7,073,289 | |
Mr. Yongquan Bi [Member] | |||
Schedule of Capitalization, Equity [Line Items] | |||
Aggregate amount of consideration | $ 500,000 | ||
Price per share | $ 1 | ||
Shares of common stock | 500,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Tax jurisdiction from: | ||
– Local | $ (212,582) | $ (560,363) |
– Foreign | (16,782,095) | (1,015,308) |
Loss before income taxes | $ (16,999,677) | $ (1,575,671) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | ||
- Local | $ 0 | |
- Foreign | 117 | 2,744 |
Deferred: | ||
- Local | 0 | |
- Foreign | 0 | |
Income tax expense | $ 117 | $ 2,744 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure Reconciliation Of Income Tax Rate To Effective Income Tax Rate [Abstract] | |||
Loss before income taxes from PRC operation | $ (16,782,095) | $ (1,015,308) | |
Statutory income tax rate | 25.00% | 25.00% | 25.00% |
Income tax expense at statutory rate | $ (4,195,574) | $ (253,827) | |
Tax effect of non-deductible items | 4,195,691 | 256,571 | |
Income tax expense | $ 117 | $ 2,744 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | |||
Net operating loss carryforwards | |||
United States – current rate | 868,275 | 1,333,501 | |
United States – effect of change in statutory rate | (509,868) | ||
Less: valuation allowance | (868,275) | (823,633) | $ (1,123,394) |
Deferred tax assets |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure Income Taxes Additional Information [Abstract] | |||
Deferred Tax Assets, Valuation Allowance | $ 868,275 | $ 823,633 | $ 1,123,394 |
Net operating losses | 4,134,645 | ||
Valuation allowance increased | $ 44,642 | $ 299,761 | |
Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate | 25.00% | 25.00% | 25.00% |
Income Taxes - Additional Inf_2
Income Taxes - Additional Information (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes [Line Items] | |||
Expiration date | 2037 | ||
Deferred Tax Assets, Valuation Allowance | $ 868,275 | $ 823,633 | $ 1,123,394 |
Operating Loss Carryforwards | 4,134,645 | ||
Operating Loss Carryforwards, Valuation Allowance | $ 44,642 | $ 299,761 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 25.00% | 25.00% | 25.00% |
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent | 25.00% | ||
U S [Member] | |||
Income Taxes [Line Items] | |||
Operating Loss Carryforwards | $ 3,922,063 | ||
Scenario, Plan [Member] | |||
Income Taxes [Line Items] | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% |
Net Loss Per share (Details)
Net Loss Per share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net loss per share: | ||
Net loss attributable to common shareholders | $ 16,786,509 | $ 1,569,817 |
Weighted average common shares outstanding - Basic and diluted | 7,477,399 | 7,073,289 |
Net loss per share - Basic and diluted | $ (2.27) | $ (0.22) |
China Contribution Plan (Detail
China Contribution Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure Text Block Supplement [Abstract] | ||
Total contributions | $ 138,000 | $ 167,000 |
Statutory Reserves (Details)
Statutory Reserves (Details) | 12 Months Ended |
Dec. 31, 2018 | |
STATUTORY RESERVES [Abstract] | |
Appropriation To Statutory Reserve Description | Appropriation to the statutory reserve should be at least 10% of the after-tax net income until the reserve is equal to 50% of the registered capital. |
Concentrations of Risk (Detail)
Concentrations of Risk (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | ||
Purchases | $ 5,960,475 | $ 7,378,113 |
Percentage of purchases | 38.00% | 10.00% |
Accounts payable | $ 750,263 | |
Vendor One [Member] | ||
Concentration Risk [Line Items] | ||
Purchases | $ 1,006,974 | |
Percentage of purchases | 27.00% | |
Accounts payable | $ 746,813 | |
Vendor Two [Member] | ||
Concentration Risk [Line Items] | ||
Purchases | $ 418,753 | |
Percentage of purchases | 11.00% | |
Accounts payable | $ 3,450 |
Concentrations of Risk (Details
Concentrations of Risk (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | ||
Sales revenues | $ 6,362,724 | $ 8,267,174 |
Percentage of purchases | 38.00% | 10.00% |
Revenues And Accounts Receivable [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Sales revenues | $ 623,187 | $ 3,807,773 |
Percentage of purchases | 11.00% | 48.00% |
Accounts receivable | $ 695,374 | $ 8,523,860 |
Subsequent Events (Detail)
Subsequent Events (Detail) - Subsequent Event [Member] - USD ($) | Apr. 11, 2019 | Jan. 31, 2019 | May 31, 2019 | Apr. 22, 2019 |
CNY [Member] | ||||
Subsequent Event [Line Items] | ||||
Unpaid outstanding payable | $ 1,278,182 | |||
Unpaid outstanding payable, shares | 1,260,000 | |||
Purchase Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Stock purchase agreement, description | The Company entered into an Agreement with LASTING WISDOM HOLDINGS LIMITED, a company organized under the laws of the British Virgin Islands, PUKUNG LIMITED, a company organized under the laws of Hong Kong, BEIJING XIN RONG XIN INDUSTRIAL DEVELOPMENT CO., LTD., a company organized under the laws of the PRC, Boqi Pharmacy and several additional individual sellers. The aggregate purchase price for the shares of Boqi Pharmacy’s parent consists of cash consideration of RMB 40,000,000 and up to 1,500,000 shares of our common stock. The purchase price is subject to post-closing adjustments (contingent on fair market value of the acquired companies). This transaction is anticipated to close during the third or fourth quarter of 2019. The Company plans to raise RMB 40,000,000 in equity to fund the acquisition cost. | |||
Chief Executive Officer [Member] | ||||
Subsequent Event [Line Items] | ||||
Short-term loan agreements, description | The Company entered into two short-term loan agreements with Mr. Gang Li, the director and former CEO of the Company, to borrow RMB 4.5 million and RMB 5 million, respectively. Both loans are guaranteed by one of the Company’s related parties and 43% non-controlling interest of Import & Export Company, Nengfa Weiye Tieling Valve Joint-stock Co. Ltd. |