Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Entity Registrant Name | HEBRON TECHNOLOGY CO., LTD |
Entity Central Index Key | 0001603993 |
Trading Symbol | hebt |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2018 |
Entity Well-known Seasoned Issuer | No |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Ex Transition Period | false |
Class A Common Shares | |
Entity Common Stock, Shares Outstanding | 8,491,177 |
Class B Common Shares | |
Entity Common Stock, Shares Outstanding | 7,778,400 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 947,588 | $ 3,220,781 |
Restricted Cash | 2,124,655 | 55,322 |
Contracts receivable, net | 24,669,365 | 16,904,972 |
Accounts receivable, net | 2,655,845 | 1,419,305 |
Notes receivable | 81,611 | 689,171 |
Retainage receivables, net | 3,146,986 | 2,564,404 |
Inventories | 365,480 | 1,582,501 |
Prepayments and advances to suppliers, net | 3,568,003 | 11,904,107 |
Other receivables, net | 767,681 | 240,284 |
Prepaid expenses and other current assets | 94,539 | |
TOTAL CURRENT ASSETS | 38,421,753 | 38,580,847 |
Property and equipment at cost, net of accumulated depreciation | 12,515,894 | 14,588,262 |
Land use right, net of accumulated amortization | 969,339 | 1,086,148 |
Deposits for rent | 43,633 | 46,101 |
Equity investment | 3,054,090 | |
Deferred tax assets | 1,648,967 | 247,324 |
TOTAL ASSETS | 56,653,676 | 54,548,682 |
CURRENT LIABILITIES: | ||
Short-term loans | 1,698,058 | 457,940 |
Notes Payable | 2,117,382 | 55,322 |
Accounts payable | 1,361,687 | 1,276,784 |
Accrued expenses and other current liabilities | 2,112,472 | 1,327,513 |
Other loan payable - current | 177,291 | 179,182 |
Advances from customers | 3,131,338 | 2,825,215 |
Taxes payable | 9,085,746 | 7,067,593 |
TOTAL CURRENT LIABILITIES | 19,683,974 | 13,189,549 |
Other loan payable - long-term | 212,351 | 411,683 |
Long-term loans | 414,912 | |
TOTAL LIABILITIES | 19,896,325 | 14,016,144 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS' EQUITY: | ||
Additional paid-in capital | 13,361,447 | 10,237,965 |
Retained earnings | 24,732,776 | 29,877,491 |
Accumulated other comprehensive income (loss) | (1,353,141) | 402,387 |
TOTAL SHAREHOLDERS' EQUITY | 36,757,351 | 40,532,538 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 56,653,676 | 54,548,682 |
Common Class A [Member] | ||
SHAREHOLDERS' EQUITY: | ||
Common stock | 8,491 | 6,917 |
Common Class B [Member] | ||
SHAREHOLDERS' EQUITY: | ||
Common stock | $ 7,778 | $ 7,778 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Common Class A [Member] | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 8,491,177 | 6,916,947 |
Common stock, shares outstanding | 8,491,177 | 6,916,947 |
Common Class B [Member] | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 7,778,400 | 7,778,400 |
Common stock, shares outstanding | 7,778,400 | 7,778,400 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Other Comprehensive Income (Loss) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
REVENUE | |||
Installation service | $ 17,297,212 | $ 23,748,141 | $ 24,299,062 |
Fluid equipment sales | 7,992,848 | 5,452,304 | 2,798,774 |
TOTAL REVENUE | 25,290,060 | 29,200,445 | 27,097,836 |
COST OF REVENUE | |||
Cost of product and services | 17,458,252 | 18,080,777 | 16,192,810 |
Business and sales related taxes | 253,856 | 675,507 | 443,448 |
GROSS PROFIT | 7,577,952 | 10,444,161 | 10,461,578 |
OPERATING EXPENSES | |||
General and administrative expenses | 3,298,188 | 3,683,594 | 932,911 |
Selling expenses | 1,337,321 | 2,187,253 | 1,742,147 |
Bad debt expenses (recovery) | 7,913,442 | 187,715 | (227,873) |
Research and development expenses | 358,411 | 508,282 | 33,847 |
Total operating expenses | 12,907,362 | 6,566,844 | 2,481,032 |
LOSS) INCOME FROM OPERATIONS | (5,329,410) | 3,877,317 | 7,980,546 |
OTHER INCOME (EXPENSE) | |||
Other income, net | (426,585) | 377,174 | 6,431 |
Interest expense | (208,306) | (56,953) | (49,625) |
Income from investment | 168,534 | ||
Total other (expense) income, net | (466,357) | 320,221 | (43,194) |
(LOSS) INCOME BEFORE INCOME TAXES | (5,795,767) | 4,197,538 | 7,937,352 |
(BENEFIT FROM) PROVISION FOR INCOME TAXES | (651,052) | (2,938,849) | 2,002,467 |
NET (LOSS) INCOME | (5,144,715) | 7,136,387 | 5,934,885 |
OTHER COMPREHENSIVE INCOME (LOSS) | |||
Foreign currency translation (loss) income | (1,755,528) | 2,249,081 | (1,401,124) |
COMPREHENSIVE (LOSS) INCOME | $ (6,900,243) | $ 9,385,468 | $ 4,533,761 |
Basic and diluted (loss) earnings per common share | |||
Basic | $ (0.33) | $ 0.49 | $ 0.49 |
Diluted | $ (0.33) | $ 0.49 | $ 0.49 |
Weighted average number of shares outstanding | |||
Basic | 15,760,633 | 14,695,347 | 12,029,538 |
Diluted | 15,760,633 | 14,695,347 | 12,046,045 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) | Class A Common Stock | Class B Common Stock | Additional paid in capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |
Balance at Dec. 31, 2015 | [1] | $ 4,222 | $ 7,778 | $ 108,970 | $ 16,806,219 | $ (445,570) | $ 16,481,619 |
Balance (in shares) at Dec. 31, 2015 | [1] | 4,221,600 | 7,778,400 | ||||
Issuance Class A shares - IPO | $ 2,695 | 10,128,995 | 10,131,690 | ||||
Issuance Class A shares - IPO (in shares) | 2,695,347 | ||||||
Net income (loss) | 5,934,885 | 5,934,885 | |||||
Foreign currency translation income (loss) | (1,401,124) | (1,401,124) | |||||
Balance at Dec. 31, 2016 | $ 6,917 | $ 7,778 | 10,237,965 | 22,741,104 | (1,846,694) | 31,147,070 | |
Balance (in shares) at Dec. 31, 2016 | 6,916,947 | 7,778,400 | |||||
Net income (loss) | 7,136,387 | 7,136,387 | |||||
Foreign currency translation income (loss) | 2,249,081 | 2,249,081 | |||||
Balance at Dec. 31, 2017 | $ 6,917 | $ 7,778 | 10,237,965 | 29,877,491 | 402,387 | 40,532,538 | |
Balance (in shares) at Dec. 31, 2017 | 6,916,947 | 7,778,400 | |||||
Net income (loss) | (5,144,715) | (5,144,715) | |||||
Foreign currency translation income (loss) | (1,755,528) | (1,755,528) | |||||
Issuance of class A common stock for consulting services | $ 131 | 239,369 | 239,500 | ||||
Issuance of class A common stock for consulting services, shares | 131,452 | ||||||
Issuance of class A common stock for equity investment | $ 1,443 | 2,884,113 | 2,885,556 | ||||
Issuance of class A common stock for equity investment, shares | 1,442,778 | ||||||
Balance at Dec. 31, 2018 | $ 8,491 | $ 7,778 | $ 13,361,447 | $ 24,732,776 | $ (1,353,141) | $ 36,757,351 | |
Balance (in shares) at Dec. 31, 2018 | 8,491,177 | 7,778,400 | |||||
[1] | Retrospectively adjusted the reclassification of the Company's common stock (see Note 14) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $ (5,144,715) | $ 7,136,387 | $ 5,934,885 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 1,195,161 | 939,995 | 517,402 |
Loss on disposition of property and equipment | 283,487 | 12,179 | 228,245 |
Deferred tax expense (benefit) | (1,471,938) | 11,526 | 56,968 |
Bad debt expense (recovery) | 7,913,442 | 187,715 | (227,873) |
Changes in operating assets and liabilities: | |||
Contracts receivable | (9,019,036) | (2,992,867) | (5,893,527) |
Accounts receivable | (1,383,452) | (950,850) | 922,611 |
Notes receivable | 593,674 | (378,205) | (85,107) |
Retainage receivables | (748,903) | (80,360) | (548,357) |
Prepayment and advances to suppliers | 93,149 | (7,127,018) | (2,861,600) |
Inventories | 1,177,956 | 788,000 | 427,878 |
Other receivables | (598,764) | (156,074) | (1,535) |
Accounts payable | 146,546 | 26,450 | (290,717) |
Notes Payable | 2,148,292 | 53,272 | |
Advances from customers | 429,217 | (370,964) | 528,193 |
Deferred revenue | (1,071,355) | 3,161 | |
Taxes payable | 2,770,253 | (2,365,120) | 2,484,264 |
Accrued expenses and other current liabilities | 890,551 | 240,505 | 382,410 |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | (725,080) | (6,096,784) | 1,577,301 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Acquisitions of property and equipment | (74,210) | (3,126,777) | (7,667) |
Payments for intangible assets | (41,000) | ||
Payments for construction in progress | (973,254) | ||
NET CASH (USED IN) INVESTING ACTIVITIES | (115,210) | (3,126,777) | (980,921) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from short-term bank loans | 1,995,763 | 295,954 | 301,019 |
Repayment of short-term bank loans | (1,088,667) | (795,443) | |
Proceeds from long-term loans | 173,873 | 556,885 | |
Repayment of long-term loans | (47,353) | ||
Repayment/Proceeds from other loan | (176,427) | 582,205 | |
Repayment of other loan | (21,457) | ||
Repayment of (proceeds from) related parties | (66,582) | 72,009 | |
Proceeds from issuance of shares in IPO | 10,131,690 | ||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 730,669 | 916,640 | 10,266,160 |
EFFECT OF EXCHANGE RATE CHANGE ON CASH | (94,239) | (292,869) | (104,290) |
NET (DECREASE) INCREASE IN CASH | (203,860) | (8,599,790) | 10,758,250 |
CASH AND RESTRICTED CASH-beginning of year | 3,276,103 | 11,875,893 | 1,117,643 |
CASH AND RESTRICTED CASH-end of year | 3,072,243 | 3,276,103 | 11,875,893 |
SUPPLEMENTAL CASH FLOW DISCLOSURES: | |||
Cash paid for income taxes | 42,250 | ||
Cash paid for interest | 91,917 | 75,704 | 50,705 |
Non-cash financing activities | |||
Warrants issued to placement agent in connection with the Company's IPO | $ 488,730 | ||
Issuance of shares for consulting services | 239,500 | ||
Issuance of shares for equity investment | $ 2,885,556 |
Organization and Business Descr
Organization and Business Description | 12 Months Ended |
Dec. 31, 2018 | |
Organization And Business Description [Abstract] | |
ORGANIZATION AND BUSINESS DESCRIPTION | Note 1 — ORGANIZATION AND BUSINESS DESCRIPTION Organization Hebron Technology Co., Ltd, (“Hebron Technology”) is a limited company established under the laws of the British Virgin Islands on May 29, 2012 as a holding company. Mr. Anyuan Sun (“Mr. Sun”), the Chairman of the Board and CEO of the Company, is the ultimate controlling shareholder (“the Controlling Shareholder”) of the Company. Hong Kong Xibolun Technology Limited (“HK Xibolun”) is a limited company formed in accordance with laws and regulations of Hong Kong on June 14, 2011, as a trading company. HK Xibolun is controlled by the same Controlling Shareholder. Zhejiang Xibolun Automation Project Technology Co., Ltd. (“Xibolun Automation”) was incorporated on September 24, 2012 in the People’s Republic of China (“China” or “PRC”) and initially owned by Hebron Technology, Xibolun Equipment, and Zhejiang Xibolun Technology Co., Ltd. (“Zhejiang Xibolun”), a Chinese company also controlled by Mr. Sun. Wenzhou Xibolun Fluid Equipment Co., Limited (“Xibolun Equipment”) was incorporated in China on January 25, 2005. Prior to the reorganization described below, Xibolun Equipment was owned by the Controlling shareholder and another foreign shareholder, Mr. Gongqi Xiang, with each owning 70% and 30% equity interest, respectively. Mr. Gongqi Xiang is holding shares on behalf of Mr. Sun. Therefore, Xibolun Equipment is considered ultimately controlled by Mr. Sun. Reorganization On October 30, 2012, HK Xibolun entered into separate equity transfer agreements with Hebron Technology, Xibolun Equipment, and Zhejiang Xibolun, pursuant to which shareholders of Xibolun Automation agreed to transfer all of their equity interests in Xibolun Automation to HK Xibolun. The transfer became effective on December 5, 2012. Xibolun Equipment was incorporated on January 25, 2005. By July 20, 2011, Xibolun Equipment was owned by the Controlling shareholder and another foreign shareholder, Mr. Gongqi Xiang, by holding shares of 70% and 30%, respectively. On July 21, 2011, HK Xibolun entered into an equity transfer agreement with Mr. Gongqi Xiang, who owned 30% of Xibolun Equipment’s shares, in which Mr. Gongqi Xiang agreed to transfer his 30% ownership interest of Xibolun Equipment to Xibolun Automation for RMB 300,000. On July 29, 2013, Mr. Sun transferred his 70% ownership interest in Xibolun Equipment to Xibolun Automation as well for RMB 700,000, which is now a wholly owned subsidiary of HK Xibolun. Subsequent to the transfers, Xibolun Equipment became a wholly owned subsidiary of HK Xibolun. On October 22, 2012, in anticipation of an initial public offering (“IPO”) of its equity securities, the shareholder of HK Xibolun transferred his shares in HK Xibolun to the Company without any consideration and as a result, HK Xibolun became a wholly-owned subsidiary of the Company. The above mentioned transactions were accounted for as a recapitalization. Hebron Technology and its wholly-owned subsidiary HK Xibolun, which owns a 100% interest of Xibolun Automation and Xibolun Equipment, were effectively controlled by the same Controlling Shareholder before and after the reorganization and therefore the Reorganization was considered under common control. Hebron Technology, HK Xibolun, Xibolun Automation and Xibolun Equipment are collectively referred to as the “Company”. The Company, through its main operational subsidiaries, is engaged in the manufacture of fluid equipment including valves, pumps, pipe fittings and others, with particular emphasis on the intelligentized valves and installation services for pharmaceutical engineering construction. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and have been consistently applied. The consolidated financial statements include the financial statements of Hebron Technology, HK Xibolun, Xibolun Automation and Xibolun Equipment. All inter-company balances and transactions are eliminated upon consolidation. For the Company's equity investment which the Company does not have control and is not the primary beneficiary, but has significant influence in the decision-making of the ordinary course of business, the equity method is applied. Uses of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during each reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company's consolidated financial statements include: the allowance for doubtful accounts, the valuation of inventory, realizability of deferred tax assets, costs to complete contracts, estimated useful lives and fair values in connection with the impairment of property and equipment and accruals for income tax uncertainties. Revenue recognition The Company adopted ASC Topic 606 Revenue from Contracts with Customers ("ASC 606") on January 1, 2018 using the modified retrospective approach. Revenues for the year ended December 31, 2018 were presented under ASC 606, and revenues for the years ended December 31, 2017 and 2016 were not adjusted and continue to be presented under ASC Topic 605, Revenue Recognition. There is no adjustment to the opening balance of retained earnings at January 1, 2018 since there was no change to the timing and pattern of revenue recognition upon adoption of ASC 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company's customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services. The Company's revenues are primarily derived from the following sources: Sales of products Installation contracts Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue includes all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. The Company sometimes enters into installation service contracts in connection with product sales. The manufacture of fluid equipment control systems comprises two stages: (a) manufacture; and (b) installation. The Company always enters into separate product and installation contracts with the customer as the customer has the choice to use its own staff or external contractors to install the products based on product installation manuals provided by the Company when the products are delivered. The Company usually sells the product on a standalone basis and also is engaged by customers to install the systems they purchase from other suppliers. It is the Company's policy to sell its products at the set prices regardless of whether the customer separately enters into an installation contract with the Company. The Company always prices its installation services at market competitive rates regardless of whether the installation service relates to its own products or standalone installation services. Therefore, the Company determined there are two sperate performance obligations, and recognizes product sales and installation revenue separately. Cash The Company maintains cash with financial institutions in China, which are typically not insured or otherwise protected. Should any of these institutions holding the Company's cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The restricted cash balance is associated with the Company's short-term borrowings, thus, classified as a current asset. As of December 31, 2018, and 2017, the Company had restricted cash of $2,124,655 and $55,322, respectively, related to the bank acceptance notes payable. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts presented in the statement of cash flows. The Company adopted the new standard effective January 1, 2018, using the retrospective transition method. Accounts and contract receivables Accounts and contract receivables from equipment sales and installation services are stated at net realizable value. An allowance for doubtful accounts is established based on the management's assessment of the recoverability of accounts and other receivables. Judgment is required in assessing the realizability of these receivables, including the current credit worthiness of each customer and the related aging analysis. An allowance is provided for accounts when management has determined that the likelihood of collection is doubtful. The Company writes off accounts and contract receivables against the allowance when a balance is determined to be uncollectible. Retainage receivables Retainage receivables represent the amount retained by the Company's customers to ensure the quality of the installation services and any possible follow-up maintenance related to the installation. The term of these retainage receivables is typically within one year after the completion date of the installation project. If there is no dispute regarding the quality of the installation project during the year, such retainage receivable should be paid by the Company's customer. Management regularly reviews aging of retainage receivables and changes in payment trends and records an allowance when management believes collection of amounts due are at risk. Inventories Inventories are stated at the lower of cost or net realizable value. Inventories consist of raw materials, finished goods, work in process, low value consumables, and installation projects in process that have not been completed. Provision is made for slow-moving, obsolete or unusable inventory. Advances to suppliers The Company advances funds to certain suppliers for purchases of raw materials, plant and equipment. These advances are interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. The Company recorded a provision for doubtful accounts of $386,563, $18,717 and $19,284 for the years ended December 31, 2018, 2017 and 2016, respectively. Property and equipment Property and equipment are recorded at cost. Depreciation is provided in amounts sufficient to amortize the cost of the related assets over their useful lives using the straight line method, as follows: Useful life Buildings 20 years Machinery and equipment 3 - 10 years Transportation equipment 4 years Office equipment 3 - 5 years Leasehold improvements Shorter of remaining lease term or life of assets Equity method of accounting for investments The Company evaluates the method of accounting for investments in which it holds an equity interest based on the amount of control it exercises over the operations of the investee, exposure to losses in excess of its investment, the ability to significantly influence the investee and whether the Company is the primary beneficiary of the investee. Under the voting interest model, the Company applies the equity method when the Company owns or controls from 20% to 50% of the voting shares, or below 20% of the voting shares when significant influence can be exercised over the operating and financial policies of the investee company. Under the Variable Interest (VIE) Model, the investments are accounted for under the equity method if the Company has determined it does not have a controlling financial interest and therefore is not the VIE's primary beneficiary. On March 10, 2018, the Company entered into a share acquisition agreement (the "Agreement") with the sole shareholder of Xuzhou Weijia Biotechnology Co., Ltd. ("Weijia") to acquire 49% of the equity in Weijia. Pursuant to the Agreement, the Company issued 1,442,778 unregistered Class A common shares (based on an agreed value of $2.00 per share, totalling $2,885,556) as a consideration to the individuals designated by the selling shareholder of Weijia. The Company accounts for its investment in Weijia under the equity method of accounting. As of December 31, 2018, the investment accounted for was $3,054,090 and is included in equity investment on the Consolidated Balance Sheets. For the year ended December 31, 2018, the Company recorded income of $168,534 from its investment in Weijia. Land use right The Company's land use right is valued at cost. The land use right is amortized on straight line method over the term of the land use right. Research and development costs Research and development costs are expensed to operations as incurred and include fees paid to third party contractors. Long-lived assets and other acquired intangible assets The Company reviews its long-lived assets, including property and equipment and identifiable intangibles, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company did not record any impairment as of December 31, 2018, 2017 and 2016. Income taxes The Company's subsidiaries in China are subject to the income tax laws of the PRC and Hong Kong. No taxable income was generated outside the PRC and Hong Kong for the years ended December 31, 2018, 2017 and 2016. The Company accounts for income tax under the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the differences between financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Deferred tax assets are also provided for carryforward losses which can be used to offset future taxable income. Deferred income taxes will be recognized if significant temporary differences between tax and financial statements occur. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of December 31, 2018, 2017 and 2016, no valuation allowance is considered necessary. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likelihood of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties relating to income taxes have been incurred during the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018, the tax years ended December 31, 2016 through December 31, 2018 for the Company's PRC subsidiaries remain open for statutory examination by PRC tax authorities. Under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC, income tax is payable by enterprises at a rate of 25% of their taxable income. The Company believes that it has provided the best estimates of its accrued tax liabilities because those accruals are based on the prevailing tax rates stipulated by the laws (see Note 12). Value added tax Sales revenue represents the invoiced value of goods, net of a VAT. All of the Company's products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. The value-added tax rate was reduced to 16% from May 1, 2018, and was further reduced to 13% from April 1 2019. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their finished product. Foreign currency translation Since the Company operates primarily in the PRC, the Company's functional currency is the Chinese Yuan ("RMB"). The Company's financial statements have been translated into the reporting currency of the United States Dollar. Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USDs at the rates used in translation. Fair value of financial instruments The Company follows the provisions of Financial Accounting Standards Board ("FASB"), Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 — Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 — Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the balance sheets for cash, contracts receivable, accounts receivable, notes receivable, retainage receivables, prepayments and advances to suppliers, other receivables, accounts payable, advances from customers, deferred revenue, tax payable, due to related parties and accrued expenses and other current liabilities, approximate their fair value based on the short-term maturity of these instruments. The Company believes that the carrying amount of the short-term and long term loans approximates fair value based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rate. Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, contracts receivable, accounts receivable and retainage receivables. As of December 31, 2018 and 2017, $949,578 and $3,216,938 of the Company's cash was on deposit at financial institutions in the RMB where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. While management believes that these financial institutions are of high credit quality, it also continually monitors their creditworthiness. Contracts receivable, accounts receivable and retainage receivables are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company's assessment of its customers' creditworthiness and its ongoing monitoring of outstanding balances. Earnings (loss) per share The Company computes earnings (loss) per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the year ended December 31, 2018, since the company had a loss, basic and dilutive loss per share are the same. For the years ended December 31, 2017 and 2016, 0 and 16,507 unexercised Public Offering Warrants were dilutive, and were included in the computation of diluted EPS. Statements of cash flows In accordance with FASB ASC Topic 230, "Statement of Cash Flows," cash flows from the Company are calculated based upon the local currencies and translated at the average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the Company's statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews new accounting standards that are issued. In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S. federal corporate income tax rate resulting from the enactment of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act. The Company does not expect this guidance will have a material impact on its consolidated financial statements. In March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 ("ASU 2018-05"), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the "Act") that was signed into law on December 22, 2017 and Staff Accounting Bulletin No. 118 ("SAB 118") that was released by the Securities and Exchange Commission. The Act changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international tax consequences for many companies that operate internationally. The Company does not believe this guidance will have a material impact on its consolidated financial statements. On June 20, 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The new standard is effective for us on January 1, 2019. Early adoption is permitted, including in interim periods, and should be applied to all new awards granted after the date of adoption. The Company does not expect this guidance will have a material impact on its consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement" ("ASU 2018-13"). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect this guidance will have a material impact on its consolidated financial statements. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements of operations and cash flows. |
Contract Receivables, Net
Contract Receivables, Net | 12 Months Ended |
Dec. 31, 2018 | |
Contracts Receivable [Abstract] | |
CONTRACT RECEIVABLES, NET | Note 3 — CONTRACT RECEIVABLES, NET The contracts receivable consists of the following: December 31, December 31, Contract receivables $ 24,669,365 $ 16,904,972 Allowance for doubtful accounts - - $ 24,669,365 $ 16,904,972 The contract receivables are generally due when the Company completes the related installation project. The Company offers longer credit terms to two of its major general contractors, who accounted for 100%, 86% and 90% of total contract revenue for the years ended December 31, 2018, 2017 and 2016, respectively, for the purpose of maintaining our long-term relationship. The Company had not incurred any bad debts with these two general contractors in the past and considers these contracts receivable fully collectible. Thus, the Company did not provide any allowance for doubtful accounts for these outstanding contract receivable for the years ended December 31, 2018 and 2017. |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | Note 4 — ACCOUNTS RECEIVABLE, NET The accounts receivable consists of the following: December 31, December 31, Accounts receivables $ 2,953,585 $ 1,715,607 Allowance for doubtful accounts (297,740 ) (296,302 ) $ 2,655,845 $ 1,419,305 The movement in the allowance for doubtful accounts can be reconciled as follows: December 31, December 31, Beginning of the year $ 296,302 $ 494,459 Recovery - (222,816 ) Provision 17,301 - Foreign exchange effect (15,863 ) 24,659 $ 297,740 $ 296,302 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | Note 5 — INVENTORIES The inventories consist of the following: December 31, December 31, Raw materials $ 46,009 $ - Finished goods 251,869 1,309,830 Installation projects in process 67,602 272,671 $ 365,480 $ 1,582,501 There were no inventory reserves as of December 31, 2018 and 2017. |
Prepayments and Advances to Sup
Prepayments and Advances to Suppliers, Net | 12 Months Ended |
Dec. 31, 2018 | |
Prepayments And Advance To Suppliers Net [Abstract] | |
PREPAYMENTS AND ADVANCES TO SUPPLIERS, NET | Note 6 — PREPAYMENTS AND ADVANCES TO SUPPLIERS, NET Prepayments and advances to suppliers consisted of the following: December 31, December 31, Advances made to raw material suppliers (a) $ 8,010,272 $ 6,984,783 Advances made to construction subcontractors (b) 2,907,750 3,764,954 Advances made for purchases of equipment 910,872 962,396 Prepaid consulting fees - 841,216 Others 3,906 43,393 Subtotal 11,832,800 12,596,742 Allowance for doubtful accounts (8,264,797 ) (692,635 ) $ 3,568,003 $ 11,904,107 (a) The prepayments and deposits on raw materials are generally required by our suppliers for the purpose of ongoing business relationships. The prepayments and deposits are not directly associated with any specific purchase contract or any specific price but will be used to offset any accounts payable balance resulting from any specific purchase order priced at market. (b) Advances to construction subcontracts represent the prepayments made by the Company to our construction subcontractors at the beginning of our customer projects for the purpose of acquiring necessary construction materials, equipment and required deposits. Changes of allowance for doubtful accounts for the years ended December 31, 2018 and 2017 are as follows: December 31, December 31, Beginning balance $ 692,635 $ 272,858 Provision 7,609,244 386,563 Foreign exchange effect (37,082 ) 33,214 Ending balance $ 8,264,797 $ 692,635 The Company recorded $7,609,244 bad debt provision related to the prepayment and advances to suppliers for the year ended December 31, 2018 due to slow utilization of those prepayments and advances in fiscal 2018. For the years ended December 31, 2017 and 2016, the Company recorded $386,563 and $18,717 bad debt provision for the years ended December 31, 2017 and 2016, respectively. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, NET | Note 7 — PROPERTY AND EQUIPMENT, NET Property and equipment, net, consists of the following: December 31, December 31, Buildings $ 11,032,207 $ 11,656,259 Machinery equipment 2,858,928 4,385,129 Transportation equipment 518,612 567,757 Office equipment 37,518 18,963 Leasehold improvements 551,582 334,978 Subtotal 14,998,846 16,963,086 Less: accumulated depreciation (2,482,952 ) (2,374,824 ) Property, plant and equipment, net $ 12,515,894 $ 14,588,262 Depreciation and amortization expense was $1,134,136, $884,947 and $461,412 for the years ended December 31, 2018, 2017 and 2016, respectively. For the years ended December 31, 2018, 2017 and 2016, the Company disposed of certain obsolete machinery equipment for no proceeds and recognized a loss of $283,487, $12,179 and 228,245 respectively. |
Land Use Right
Land Use Right | 12 Months Ended |
Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
LAND USE RIGHT | Note 8 — LAND USE RIGHT The Company carries its land use right at cost less accumulated amortization. All land in China is government owned and cannot be sold to any individual or company. However, the government grants the user a "land use right" (the "Right") to use the land. The Company has the Right to use the land for 25 years and amortizes the Right on a straight-line basis over the period of 25 years. The amortization expense was $61,025, $55,048 and $55,990 for the years ended December 31, 2018, 2017and 2016, respectively. December 31, December 31, Land use right $ 1,352,629 $ 1,429,142 Less: accumulated amortization (383,290 ) (342,994 ) Land use right, net $ 969,339 $ 1,086,148 The estimated future amortization expense is as follows: Year ending December 31, 2019 $ 57,166 2020 57,166 2021 57,166 2022 57,166 2023 57,166 Thereafter 710,051 Total estimated future amortization expenses $ 995,881 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | Note 9 — DEBT Debt consisted of the following loans: Lender December 31, Term Effective Bank of China Longwan Branch $ 202,894 April 13, 2016 to April 14, 2019* 5.70 % Bank of China Longwan Branch 186,168 June 8, 2016 to April 14, 2019* 5.70 % Industrial Bank Co. Ltd. Wenzhou Branch 727,220 July 17, 2018 to July 17, 2019 6.04 % Longwan Rural Commercial Bank Shacheng Branch 290,888 July 23, 2018 to July 17, 2019 8.71 % Longwan Rural Commercial Bank Shacheng Branch 290,888 July 25, 2018 to July 17, 2019 8.71 % Total 1,698,058 Less: current portion (1,698,058 ) Long term portion $ - * both loans from Bank of China Longwan Branch were fully repaid upon maturity. All principal of the above loans as of December 31, 2018 are due upon maturity and interest payments are due on a monthly basis. For these loans, the outstanding balances were guaranteed by the Controlling Shareholder's immediate family members and unrelated third parties. Lender December 31, Term Effective Bank of China Longwan Branch $ 262,009 April 13, 2016 to April 14, 2019 5.70 % Bank of China Longwan Branch 303,501 June 8, 2016 to April 14, 2019 5.70 % Longwan Rural Commercial Bank Shacheng Branch 307,342 September 30, 2017 to September 28, 2018 10.45 % Total 872,852 Less: current portion 457,940 Long term portion $ 414,912 All principal of the above loans as of December 31, 2017 are due upon maturity and interest payments are due on a monthly basis. For these loans, the outstanding balances were guaranteed by the Controlling Shareholder's immediate family members and unrelated third parties. Interest expense for these loans was $ 91,977, $48,730 and $49,625 for the years ended December 31, 2018, 2017 and 2016, respectively. |
Bank Acceptance Notes Payable
Bank Acceptance Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
BANK ACCEPTANCE NOTES PAYABLE | Note 10 — BANK ACCEPTANCE NOTES PAYABLE Bank acceptance notes payable consisted of the following as of December 31, 2018 and 2017: December 31, December 31, Bank acceptance notes payable $ 2,117,382 $ 55,322 Total $ 2,117,382 $ 55,322 Bank acceptance notes are issued by financial institutions on the Company’s behalf to vendors with a specific due date usually for a period within one year. These notes can either be endorsed by the vendor to other third parties as payment or can be factored to other financial institutions before becoming due. Pursuant to the loan facility agreement signed on January 19, 2018 between the Company and China Zheshang Bank, the Company had bank acceptance notes of $2,117,382 (RMB 14.5 million) with maturity dates of six months after the issuance date. The Company was also required to maintain restricted cash deposits of $2,124,655 (RMB 14.6 million) to guarantee the bank notes as of December 31, 2018. These notes were fully paid upon maturity and the restricted deposit was also released upon the payment. |
Sales Leaseback
Sales Leaseback | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
SALES LEASEBACK | Note 11 — SALES LEASEBACK On November 9, 2017, the Company entered into a sale leaseback agreement (the "Agreement") with Zhongli International Leasing Co., Ltd ("Zhongli"). Pursuant to the Agreement, the Company sold certain machinery purchased during the year to Zhongli for approximately $691,520 (RMB 4.5 million). The Company then leased back the machinery from Zhongli for 48 months with specified monthly payments over the lease term. The Company has a bargain purchase option at a price of Nil to buyback this equipment by the end of the lease term. All these machines are currently being used by the Company for its production purposes. The Company concluded this transaction does not qualify for sale-leaseback accounting in accordance with ASC 840-40-25-11 and shall record under the lease financing method. Under the lease financing method, the assets remain on the Company's consolidated balance sheet and the proceeds from the transactions are recorded as a financing liability. The minimum payments of the lease term has 35 months from December 17, 2017 to November 17, 2021. As of December 31, 2018, the lease payments balance are as follows: Total lease payment as of December 31, 2017 $ 590,865 Less: foreign exchange effect (31,634 ) Less: payments during the year (168,589 ) Total loan balance as of December 31, 2018 389,642 Less: current portion of payment obligation (177,291 ) Long term payable as of December 31, 2018 $ 212,351 According to the agreement, future obligations for payments of the above lease agreement are as below: Twelve months ended December 31, 2018 2019 $ 177,291 2020 156,939 2021 55,412 Total $ 389,642 Interest expense incurred for the year ended December 31, 2018 and 2017 amounted to $85,186 and $8,223, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Note 12 — INCOME TAXES Taxes payable consisted of the following: December 31, December 31, Income tax payable $ 5,763,945 $ 5,503,770 Value added tax payable 2,024,902 351,098 Business tax payable 878,133 978,130 Other taxes payable 418,766 234,595 Total taxes payable $ 9,085,746 $ 7,067,593 In the normal course of its business, the Company, including in particular Xibolun Automation, Xibolun Equipment, may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due. The Company’s management believes the Company has paid or accrued for all taxes owed by the Company. As of December 31, 2017 and 2016, the Company had accrued (before adjustment) total tax liabilities of $12.0 million and $8.7 million, respectively, related to taxable years since the inception. According to PRC taxation regulation and administrative practice and procedures, the statute of limitation on the tax authority’s audit or examination of previously filed tax returns expires three years from the date they were filed. The Company obtained a written statement from the local tax authority that no additional taxes are due as of December 31, 2014. Based on these facts, the Company reversed the accrued tax liabilities in the total amount of approximately $5.0 million relating to the tax liabilities accrued for the period prior to January 1, 2015, resulting in the decrease of accrued tax liabilities from approximately $12 million to $7 million as of December 31, 2017. The Company has not made any additional tax payments since 2015 and will continue to discuss with the local tax authority to try to settle the remaining tax liabilities as soon as practicable, mostly related to its unpaid income tax and business tax, both of which are governed by the local tax authority. The total amount of unpaid tax liabilities was accrued based on the calculation using the current prevailing tax rates without including potential interest and penalties because management cannot be certain as to how much interest and penalties would be assessed, if any. Those potential interest and penalty liabilities are contingent upon the outcome of tax settlement and management estimates that the potential contingent loss related to potential interest and penalties could be Nil or as high as $1.4 million based on rates stipulated by the tax authority. Due to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of the statute of limitations. As the ongoing settlement discussions continue, management believes that it is more likely than not that the Company will not have to pay any interest and penalties associated with the unpaid taxes. Hebron Technology was incorporated in the BVI and is not subject to income taxes under the current laws of the BVI. HK Xibolun is a trading company registered in Hong Kong and subject to corporate income tax at 17.5% if revenue is generated in Hong Kong. Starting from the year ended December 31, 2018, Xibolun Automation is recognized as a High-technology Company by Chinese government, the revenues generated by Xibolun Automation were subject to a favorable income tax rate of 15%. The High-technology certificate is valid for three year starting from November 30, 2018 and is subject to renewal. Xibolun Equipment is subject to corporate income tax at unified rate of 25%. For the years ended 2017 and 2016, revenues generated in China were subject to corporate income tax at a unified rate of 25%. i) The components of the income tax provision (benefit) are as follows: For the year For the year For the year Current tax provision $ 820,886 $ 2,024,388 $ 1,945,499 Current tax recovery - (4,974,763 ) - Deferred tax provision (recovery) (1,471,938 ) 11,526 56,968 Total $ (651,052 ) $ (2,938,849 ) $ 2,002,467 ii) The following table summarizes deferred tax assets resulting from differences between financial accounting basis and tax basis of assets and liabilities: For the year For the year For the year Non-current: Provision for doubtful accounts $ 1,648,967 $ 247,324 $ 191,913 Depreciation expense - - 51,050 Total $ 1,648,967 $ 247,324 $ 242,963 No valuation allowance against the deferred tax assets is considered necessary since the Company believes that it will more likely than not utilize the future benefits. The following table reconciles the China statutory rates to the Company’s effective tax rate for the years ended December 31, 2018, 2017 and 2016. For the For the For the China Income tax statutory rate (25.0 )% 25.0 % 25.0 % Effect of favorable income tax rate in certain entity in PRC* 4.0 % - - Non-deductible items in China and others 0.1 % 2.3 % 0.2 % Foreign loss not recognized in China 9.7 % 69.0 % - Effect of tax reversal for previous years - % (166.3 )% - Effective tax rate (11.2 )% (70.0 )% 25.2 % * Xibolun Automation is subject to income tax rate of 15% starting from fiscal 2018. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. As of December 31, 2018, the tax years ended December 31, 2016 through December 31, 2018 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. |
Concentration of Major Customer
Concentration of Major Customers and Suppliers | 12 Months Ended |
Dec. 31, 2018 | |
Major Customers And Suppliers [Abstract] | |
CONCENTRATION OF MAJOR CUSTOMERS AND SUPPLIERS | Note 13 — CONCENTRATION OF MAJOR CUSTOMERS AND SUPPLIERS For the year ended December 31, 2018, four customers accounted for approximately 13%, 12%, 11% and 10% of the Company’s total revenue. For the year ended December 31, 2018, six major sub-contractors accounted for approximately 21%, 19%, 18%, 16%, 15% and 11% of subcontract costs, respectively. As of December 31, 2018, two general contractors who provided the Company’s installation projects accounted for approximately 58% and 42% of the Company’s total contracts receivable balance, respectively. For the year ended December 31, 2018, three supplier accounted for 34%, 21% and 15% of the Company’s accounts payable balance, and no individual supplier accounted for more than 10% of the Company’s advance to suppliers balance. For the year ended December 31, 2017, four major customers accounted for approximately 22%, 21%, 13% and 10%, respectively, of the Company’s total revenue. For the year ended December 31, 2017, three major sub-contractors accounted for approximately 44%, 18% and 16% of the total subcontract costs, respectively. As of December 31, 2017, two general contractors who provided for the Company’s installation projects accounted for approximately 58% and 42% of the Company’s total contracts receivable balance, respectively. For the year ended December 31, 2017, only one supplier accounted for 18% of the Company’s accounts payable balance, and one supplier accounted for 17% of the Company’s advance to suppliers balance. For the year ended December 31, 2016, two major customers each accounted for approximately 11% and 10% of the Company’s total revenue. For the year ended December 31, 2016, three major sub-contractors accounted for approximately 44%, 22% and 15% of the total subcontract costs, respectively. As of December 31, 2016, two general contractors (“Contractor A” and “Contractor B”) who provided for the Company’s installation projects accounted for approximately 51% and 45% of the Company’s total contracts receivable balance, respectively. For the year ended December 31, 2016, only one supplier accounted for 10% of the Company’s accounts payable balance. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | Note 14 — SHAREHOLDERS' EQUITY On April 6, 2015, the Board of Directors adopted a consent resolution to effectuate a 1:1000 stock split. Simultaneously on April 6, 2015, the Company also issued additional 15,000,000 common shares for nominal consideration. On April 29, 2015, the Company repurchased 4,000,000 common shares in total from current shareholders in accordance with their share percentages as treasury stock for a nominal consideration. As a result, the Company had 50,000,000 authorized common shares, $0.001 par value per share. All the existing shareholders and directors of the Company consider this issuance of 15 million common shares and repurchase of 4 million common shares on April 29, 2015 was part of the company's recapitalization to result in 12,000,000 common shares issued and outstanding prior to completion of the initial public offering. No cash or other consideration was paid for these stock issuances and repurchase. The Company believes it is appropriate to reflect the 1:1000 stock split and repurchase that resulted in 12,000,000 shares of our common stock issued and outstanding on a retroactive basis similar to stock split or dividend pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all the periods presented. On December 26, 2016, the Company completed its initial public offering ("IPO") of 2,695,347 shares of its common stock at a public offering price of $4.00 per share. The gross proceeds from the offering were approximately $10.8 million before deducting placement agents' commissions and other offering expenses, resulting in net proceeds of approximately $10.1 million. In connection with the offering, the Company's common stock began trading on the NASDAQ Capital Market beginning on December 26, 2016 under the symbol "HEBT". On November 20, 2017, the Board approved an amendment to the Company's article of association to re-designate their common shares into Class A common shares and Class B common shares. The Class A common shares have one vote per share, and the Class B common shares have five votes per share. The Third Amended and Restated Memorandum of Association was filed with the BVI Registrar of Corporate Affairs on March 7, 2018. Public Offering Warrants In connection with the IPO on December 26, 2016, the Company issued warrants equal to five percent (5%) of the shares issued in the IPO, totaling 134,768 units to the placement agents (the "Public Offering Warrants"). The warrants carry a term of three years, and shall not be exercisable for a period of six months from the closing of the IPO and shall be exercisable at $4.80 per share. Management determined that these warrants are equity instruments because the warrants are both a) indexed to its own stock; and b) classified in stockholders' equity. The warrants were recorded at their fair value on the date of grant as a component of stockholders' equity. As of December 31, 2018, the total number of warrants outstanding was 134,768 with weighted average remaining life of 1 year. No warrants were exercised as of December 31, 2018. The fair value of this Public Offering Warrants was $488,730. The fair value has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: risk free rate of 1.58%; expected term of 3 years; exercise price of the warrants of $4.80; volatility of 90.7%; and expected future dividends of nil. Equity Investment in Weijia On March 10, 2018, the Company entered into a share acquisition agreement (the "Agreement") with the sole shareholder of Xuzhou Weijia Biotechnology Co., Ltd. ("Weijia") to acquire 49% of the equity in Weijia. Pursuant to the Agreement, the Company issued 1,442,778 unregistered Class A common shares (based on an agreed value of $2.00 per share, totalling $2,885,556) as a consideration to the individuals designated by the selling shareholder of Weijia. The Company accounts for its investment in Weijia under the equity method of accounting. As of December 31, 2018, the investment was $3,054,090 and is included in equity investment on the Consolidated Balance Sheets. For the year ended December 31, 2018, the Company recorded equity income of $116,138 from its investment in Weijia. Shares Issued for Consulting Services On January 13, 2016, the Company signed a consulting agreement with Weitian Group LLC ("Weitian"), to engage Weitian to provide certain consulting services. The agreement terminated on March 12, 2018. Pursuant to the agreement, the Company was required to pay Weitian $58,500 (the "Service Fee"). On March 15, 2018, the Company and Weitian signed a settlement agreement, pursuant to which the Company issued 31,452 unregistered Class A common shares to Weitian to settle the Service Fee on March 13, 2018 and the Company recorded a consulting fee of $58,500 included in general and administrative expense for the year ended December 31, 2018. On December 26, 2017, the Company signed a consulting agreement with Real Miracle Investments Ltd. ("Miracle"), to engage Miracle as its consultant to provide professional services related to the Company's business strategies, marketing development, business operations, and merger and acquisitions, etc. As of December 31, 2017, the consulting services were not performed. The agreement has a term for one year. Pursuant to the agreement, the Company agreed to pay total of 100,000 shares of the Company's common stock as compensation for the services within 90 days after signing of the agreement. The Company issued 100,000 unregistered Class A common shares to Miracle on March 12, 2018. The fair value of those shares was assessed at $181,000 based on the stock price of those shares upon issuance and the Company recorded a consulting fee expense of $181,000 included in the general and administrative expense for the year ended December 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 15 — COMMITMENTS AND CONTINGENCIES The Company signed several lease agreements to rent office and a facility for its operations. The lease are from June 1, 2017 to May 30, 2037. As of December 31, 2018, the Company was obligated under operating leases for minimum rentals as follows: For the Year Ending December 31, 2019 $ 213,332 2020 213,332 2021 213,332 2022 213,332 2023 and thereafter 3,075,536 $ 3,928,864 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 16 — SUBSEQUENT EVENTS The Company has analyzed its operations subsequent to December 31, 2018, through the date the financial statements were available to be issued and have determined that the Company does not have any material subsequent events to disclose in these consolidated financial statements. |
Summary Of Significant Accoun_2
Summary Of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of consolidation | Basis of consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. The consolidated financial statements include the financial statements of Hebron Technology, HK Xibolun, Xibolun Automation and Xibolun Equipment. All inter-company balances and transactions are eliminated upon consolidation. For the Company’s equity investment which the Company does not have control and is not the primary beneficiary, but has significant influence in the decision-making of the ordinary course of business, the equity method is applied. |
Uses of estimates | Uses of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during each reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements include: the allowance for doubtful accounts, the valuation of inventory, realizability of deferred tax assets, costs to complete contracts, estimated useful lives and fair values in connection with the impairment of property and equipment and accruals for income tax uncertainties. |
Revenue recognition | Revenue recognition The Company adopted ASC Topic 606 Revenue from Contracts with Customers ("ASC 606") on January 1, 2018 using the modified retrospective approach. Revenues for the year ended December 31, 2018 were presented under ASC 606, and revenues for the years ended December 31, 2017 and 2016 were not adjusted and continue to be presented under ASC Topic 605, Revenue Recognition. There is no adjustment to the opening balance of retained earnings at January 1, 2018 since there was no change to the timing and pattern of revenue recognition upon adoption of ASC 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company's customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services. The Company's revenues are primarily derived from the following sources: Sales of products Installation contracts Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue includes all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. The Company sometimes enters into installation service contracts in connection with product sales. The manufacture of fluid equipment control systems comprises two stages: (a) manufacture; and (b) installation. The Company always enters into separate product and installation contracts with the customer as the customer has the choice to use its own staff or external contractors to install the products based on product installation manuals provided by the Company when the products are delivered. The Company usually sells the product on a standalone basis and also is engaged by customers to install the systems they purchase from other suppliers. It is the Company's policy to sell its products at the set prices regardless of whether the customer separately enters into an installation contract with the Company. The Company always prices its installation services at market competitive rates regardless of whether the installation service relates to its own products or standalone installation services. Therefore, the Company determined there are two sperate performance obligations, and recognizes product sales and installation revenue separately. |
Cash | Cash The Company maintains cash with financial institutions in China, which are typically not insured or otherwise protected. Should any of these institutions holding the Company’s cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. |
Restricted Cash | Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. The restricted cash balance is associated with the Company’s short-term borrowings, thus, classified as a current asset. As of December 31, 2018, and 2017, the Company had restricted cash of $2,124,655 and $55,322, respectively, related to the bank acceptance notes payable. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts presented in the statement of cash flows. The Company adopted the new standard effective January 1, 2018, using the retrospective transition method. |
Accounts and contract receivables | Accounts and contract receivables Accounts and contract receivables from equipment sales and installation services are stated at net realizable value. An allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables. Judgment is required in assessing the realizability of these receivables, including the current credit worthiness of each customer and the related aging analysis. An allowance is provided for accounts when management has determined that the likelihood of collection is doubtful. The Company writes off accounts and contract receivables against the allowance when a balance is determined to be uncollectible. |
Retainage receivables | Retainage receivables Retainage receivables represent the amount retained by the Company's customers to ensure the quality of the installation services and any possible follow-up maintenance related to the installation. The term of these retainage receivables is typically within one year after the completion date of the installation project. If there is no dispute regarding the quality of the installation project during the year, such retainage receivable should be paid by the Company's customer. Management regularly reviews aging of retainage receivables and changes in payment trends and records an allowance when management believes collection of amounts due are at risk. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Inventories consist of raw materials, finished goods, work in process, low value consumables, and installation projects in process that have not been completed. Provision is made for slow-moving, obsolete or unusable inventory. |
Advances to suppliers | Advances to suppliers The Company advances funds to certain suppliers for purchases of raw materials, plant and equipment. These advances are interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired. The Company recorded a provision for doubtful accounts of $386,563, $18,717 and $19,284 for the years ended December 31, 2018, 2017 and 2016, respectively. |
Property and equipment | Property and equipment Property and equipment are recorded at cost. Depreciation is provided in amounts sufficient to amortize the cost of the related assets over their useful lives using the straight line method, as follows: Useful life Buildings 20 years Machinery and equipment 3 - 10 years Transportation equipment 4 years Office equipment 3 - 5 years Leasehold improvements Shorter of remaining lease term or life of assets |
Equity method of accounting for investments | Equity method of accounting for investments The Company evaluates the method of accounting for investments in which it holds an equity interest based on the amount of control it exercises over the operations of the investee, exposure to losses in excess of its investment, the ability to significantly influence the investee and whether the Company is the primary beneficiary of the investee. Under the voting interest model, the Company applies the equity method when the Company owns or controls from 20% to 50% of the voting shares, or below 20% of the voting shares when significant influence can be exercised over the operating and financial policies of the investee company. Under the Variable Interest (VIE) Model, the investments are accounted for under the equity method if the Company has determined it does not have a controlling financial interest and therefore is not the VIE’s primary beneficiary. On March 10, 2018, the Company entered into a share acquisition agreement (the “Agreement”) with the sole shareholder of Xuzhou Weijia Biotechnology Co., Ltd. (“Weijia”) to acquire 49% of the equity in Weijia. Pursuant to the Agreement, the Company issued 1,442,778 unregistered Class A common shares (based on an agreed value of $2.00 per share, totalling $2,885,556) as a consideration to the individuals designated by the selling shareholder of Weijia. The Company accounts for its investment in Weijia under the equity method of accounting. As of December 31, 2018, the investment accounted for was $3,054,090 and is included in equity investment on the Consolidated Balance Sheets. For the year ended December 31, 2018, the Company recorded income of $168,534 from its investment in Weijia. |
Land use right | Land use right The Company’s land use right is valued at cost. The land use right is amortized on straight line method over the term of the land use right. |
Research and development costs | Research and development costs Research and development costs are expensed to operations as incurred and include fees paid to third party contractors. |
Long-lived assets and other acquired intangible assets | Long-lived assets and other acquired intangible assets The Company reviews its long-lived assets, including property and equipment and identifiable intangibles, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company did not record any impairment as of December 31, 2018, 2017 and 2016. |
Income taxes | Income taxes The Company’s subsidiaries in China are subject to the income tax laws of the PRC and Hong Kong. No taxable income was generated outside the PRC and Hong Kong for the years ended December 31, 2018, 2017 and 2016. The Company accounts for income tax under the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the differences between financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Deferred tax assets are also provided for carryforward losses which can be used to offset future taxable income. Deferred income taxes will be recognized if significant temporary differences between tax and financial statements occur. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of December 31, 2018, 2017 and 2016, no valuation allowance is considered necessary. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likelihood of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties relating to income taxes have been incurred during the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018, the tax years ended December 31, 2016 through December 31, 2018 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. Under the Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC, income tax is payable by enterprises at a rate of 25% of their taxable income. The Company believes that it has provided the best estimates of its accrued tax liabilities because those accruals are based on the prevailing tax rates stipulated by the laws (see Note 12). |
Value added tax | Value added tax Sales revenue represents the invoiced value of goods, net of a VAT. All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. The value-added tax rate was reduced to 16% from May 1, 2018, and was further reduced to 13% from April 1 2019. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their finished product. |
Foreign currency translation | Foreign currency translation Since the Company operates primarily in the PRC, the Company’s functional currency is the Chinese Yuan (“RMB”). The Company’s financial statements have been translated into the reporting currency of the United States Dollar. Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USDs at the rates used in translation. |
Fair value of financial instruments | Fair value of financial instruments The Company follows the provisions of Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 — Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 — Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the balance sheets for cash, contracts receivable, accounts receivable, notes receivable, retainage receivables, prepayments and advances to suppliers, other receivables, accounts payable, advances from customers, deferred revenue, tax payable, due to related parties and accrued expenses and other current liabilities, approximate their fair value based on the short-term maturity of these instruments. The Company believes that the carrying amount of the short-term and long term loans approximates fair value based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rate. |
Credit Risk | Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, contracts receivable, accounts receivable and retainage receivables. As of December 31, 2018 and 2017, $949,578 and $3,216,938 of the Company’s cash was on deposit at financial institutions in the RMB where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. While management believes that these financial institutions are of high credit quality, it also continually monitors their creditworthiness. Contracts receivable, accounts receivable and retainage receivables are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. |
Earnings (loss) per share | Earnings (loss) per share The Company computes earnings (loss) per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the year ended December 31, 2018, since the company had a loss, basic and dilutive loss per share are the same. For the years ended December 31, 2017 and 2016, 0 and 16,507 unexercised Public Offering Warrants were dilutive, and were included in the computation of diluted EPS. |
Statements of cash flows | Statements of cash flows In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company are calculated based upon the local currencies and translated at the average exchange rates during the reporting period. As a result, amounts related to assets and liabilities reported on the Company’s statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for adjustments to tax effects that were originally recorded in other comprehensive income due to changes in the U.S. federal corporate income tax rate resulting from the enactment of the U.S. tax reform legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act. The Company does not expect this guidance will have a material impact on its consolidated financial statements. In March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017 and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international tax consequences for many companies that operate internationally. The Company does not believe this guidance will have a material impact on its consolidated financial statements. On June 20, 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The new standard is effective for us on January 1, 2019. Early adoption is permitted, including in interim periods, and should be applied to all new awards granted after the date of adoption. The Company does not expect this guidance will have a material impact on its consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect this guidance will have a material impact on its consolidated financial statements. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements of operations and cash flows. |
Summary Of Significant Accoun_3
Summary Of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of amortize cost of related assets over their useful lives | Useful life Buildings 20 years Machinery and equipment 3 - 10 years Transportation equipment 4 years Office equipment 3 - 5 years Leasehold improvements Shorter of remaining lease term or life of assets |
Contracts Receivables, Net (Tab
Contracts Receivables, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Contracts Receivable [Abstract] | |
Schedule of contracts receivable | December 31, December 31, Contract receivables $ 24,669,365 $ 16,904,972 Allowance for doubtful accounts - - $ 24,669,365 $ 16,904,972 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net [Abstract] | |
Schedule of accounts receivable | December 31, December 31, Accounts receivables $ 2,953,585 $ 1,715,607 Allowance for doubtful accounts (297,740 ) (296,302 ) $ 2,655,845 $ 1,419,305 |
Schedule of allowance for doubtful accounts | December 31, December 31, Beginning of the year $ 296,302 $ 494,459 Recovery - (222,816 ) Provision 17,301 - Foreign exchange effect (15,863 ) 24,659 $ 297,740 $ 296,302 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | December 31, December 31, Raw materials $ 46,009 $ - Finished goods 251,869 1,309,830 Installation projects in process 67,602 272,671 $ 365,480 $ 1,582,501 |
Prepayments and Advances to S_2
Prepayments and Advances to Suppliers, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Prepayments And Advance To Suppliers Net [Abstract] | |
Schedule of prepayments and advances | December 31, December 31, Advances made to raw material suppliers (a) $ 8,010,272 $ 6,984,783 Advances made to construction subcontractors (b) 2,907,750 3,764,954 Advances made for purchases of equipment 910,872 962,396 Prepaid consulting fees - 841,216 Others 3,906 43,393 Subtotal 11,832,800 12,596,742 Allowance for doubtful accounts (8,264,797 ) (692,635 ) $ 3,568,003 $ 11,904,107 (a) The prepayments and deposits on raw materials are generally required by our suppliers for the purpose of ongoing business relationships. The prepayments and deposits are not directly associated with any specific purchase contract or any specific price but will be used to offset any accounts payable balance resulting from any specific purchase order priced at market. (b) Advances to construction subcontracts represent the prepayments made by the Company to our construction subcontractors at the beginning of our customer projects for the purpose of acquiring necessary construction materials, equipment and required deposits. |
Schedule of changes of allowance for doubtful accounts for advances to suppliers | December 31, December 31, Beginning balance $ 692,635 $ 272,858 Provision 7,609,244 386,563 Foreign exchange effect (37,082 ) 33,214 Ending balance $ 8,264,797 $ 692,635 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property plant and equipment | December 31, December 31, Buildings $ 11,032,207 $ 11,656,259 Machinery equipment 2,858,928 4,385,129 Transportation equipment 518,612 567,757 Office equipment 37,518 18,963 Leasehold improvements 551,582 334,978 Subtotal 14,998,846 16,963,086 Less: accumulated depreciation (2,482,952 ) (2,374,824 ) Property, plant and equipment, net $ 12,515,894 $ 14,588,262 |
Land Use Right (Tables)
Land Use Right (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Schedule of land use right at cost less accumulated amortization | December 31, December 31, Land use right $ 1,352,629 $ 1,429,142 Less: accumulated amortization (383,290 ) (342,994 ) Land use right, net $ 969,339 $ 1,086,148 |
Schedule of estimated future amortization expenses | Year ending December 31, 2019 $ 57,166 2020 57,166 2021 57,166 2022 57,166 2023 57,166 Thereafter 710,051 Total estimated future amortization expenses $ 995,881 |
Debt (Table)
Debt (Table) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Lender December 31, Term Effective Bank of China Longwan Branch $ 202,894 April 13, 2016 to April 14, 2019* 5.70 % Bank of China Longwan Branch 186,168 June 8, 2016 to April 14, 2019* 5.70 % Industrial Bank Co. Ltd. Wenzhou Branch 727,220 July 17, 2018 to July 17, 2019 6.04 % Longwan Rural Commercial Bank Shacheng Branch 290,888 July 23, 2018 to July 17, 2019 8.71 % Longwan Rural Commercial Bank Shacheng Branch 290,888 July 25, 2018 to July 17, 2019 8.71 % Total 1,698,058 Less: current portion (1,698,058 ) Long term portion $ - * both loans from Bank of China Longwan Branch were fully repaid upon maturity. Lender December 31, Term Effective Bank of China Longwan Branch $ 262,009 April 13, 2016 to April 14, 2019 5.70 % Bank of China Longwan Branch 303,501 June 8, 2016 to April 14, 2019 5.70 % Longwan Rural Commercial Bank Shacheng Branch 307,342 September 30, 2017 to September 28, 2018 10.45 % Total 872,852 Less: current portion 457,940 Long term portion $ 414,912 |
Bank Acceptance Notes Payable (
Bank Acceptance Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Schedule of bank acceptance notes payable | December 31, December 31, Bank acceptance notes payable $ 2,117,382 $ 55,322 Total $ 2,117,382 $ 55,322 |
Sales Leaseback (Tables)
Sales Leaseback (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of minimum payments for the remaining lease | Total lease payment as of December 31, 2017 $ 590,865 Less: foreign exchange effect (31,634 ) Less: payments during the year (168,589 ) Total loan balance as of December 31, 2018 389,642 Less: current portion of payment obligation (177,291 ) Long term payable as of December 31, 2018 $ 212,351 |
Schedule of future obligations for payments of lease agreement | Twelve months ended December 31, 2018 2019 $ 177,291 2020 156,939 2021 55,412 Total $ 389,642 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of taxes payable | December 31, December 31, Income tax payable $ 5,763,945 $ 5,503,770 Value added tax payable 2,024,902 351,098 Business tax payable 878,133 978,130 Other taxes payable 418,766 234,595 Total taxes payable $ 9,085,746 $ 7,067,593 |
Schedule of components of income tax provision (benefit) | For the year For the year For the year Current tax provision $ 820,886 $ 2,024,388 $ 1,945,499 Current tax recovery - (4,974,763 ) - Deferred tax provision (recovery) (1,471,938 ) 11,526 56,968 Total $ (651,052 ) $ (2,938,849 ) $ 2,002,467 |
Schedule of summarizes deferred tax assets resulting from differences between financial accounting basis and tax basis of assets and liabilities | For the year For the year For the year Non-current: Provision for doubtful accounts $ 1,648,967 $ 247,324 $ 191,913 Depreciation expense - - 51,050 Total $ 1,648,967 $ 247,324 $ 242,963 |
Schedule of effective tax rate for the year | For the For the For the China Income tax statutory rate (25.0 )% 25.0 % 25.0 % Effect of favorable income tax rate in certain entity in PRC* 4.0 % - - Non-deductible items in China and others 0.1 % 2.3 % 0.2 % Foreign loss not recognized in China 9.7 % 69.0 % - Effect of tax reversal for previous years - % (166.3 )% - Effective tax rate (11.2 )% (70.0 )% 25.2 % * Xibolun Automation is subject to income tax rate of 15% starting from fiscal 2018. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of operating leases for minimum rentals | For the Year Ending December 31, 2019 $ 213,332 2020 213,332 2021 213,332 2022 213,332 2023 and thereafter 3,075,536 $ 3,928,864 |
Organization and Business Des_2
Organization and Business Description (Details Textual) - USD ($) | 1 Months Ended | ||
Jul. 29, 2013 | Jul. 21, 2011 | Dec. 31, 2018 | |
Xibolun Automation [Member] | |||
Organization And Business Description [Line Items] | |||
Equity interest | 70.00% | 30.00% | |
Proceeds from equity interest transferred | $ 700,000 | $ 300,000 | |
Foreign Shareholder [Member] | Wenzhou Xibolun Fluid Equipment Co Limited [Member] | |||
Organization And Business Description [Line Items] | |||
Equity interest | 30.00% | ||
Majority Shareholder [Member] | Wenzhou Xibolun Fluid Equipment Co Limited [Member] | |||
Organization And Business Description [Line Items] | |||
Equity interest | 70.00% | ||
Subsidiaries [Member] | Hebron Technology [Member] | Xibolun Automation [Member] | |||
Organization And Business Description [Line Items] | |||
Equity interest | 100.00% |
Summary Of Significant Accoun_4
Summary Of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Buildings [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 20 years |
Machinery and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3-10 years |
Transportation equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 4 years |
Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3-5 years |
Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | Shorter of remaining lease term or life of assets |
Summary Of Significant Accoun_5
Summary Of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Restricted cash | $ 2,124,655 | $ 55,322 | |
Value added tax rate, description | All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price. The value-added tax rate was reduced to 16% from May 1, 2018, and was further reduced to 13% from April 1 2019. | ||
Cash, uninsured amount | $ 949,578 | 3,216,938 | |
Provision for doubtful accounts for advances to suppliers | $ 7,609,244 | $ 386,563 | $ 19,284 |
Dilutive public offering warrants that included in computation of diluted EPS | 16,507 | 0 | |
Equity method of investments accounting description | On March 10, 2018, the Company entered into a share acquisition agreement (the “Agreement”) with the sole shareholder of Xuzhou Weijia Biotechnology Co., Ltd. (“Weijia”) to acquire 49% of the equity in Weijia. Pursuant to the Agreement, the Company issued 1,442,778 unregistered Class A common shares (based on an agreed value of $2.00 per share, totalling $2,885,556) as a consideration to the individuals designated by the selling shareholder of Weijia. The Company accounts for its investment in Weijia under the equity method of accounting. | ||
Equity investment | $ 3,054,090 | ||
Income from investment in Weijia. | $ 168,534 |
Contracts Receivables, Net (Det
Contracts Receivables, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Contracts Receivable [Abstract] | ||
Contract receivables | $ 24,669,365 | $ 16,904,972 |
Allowance for doubtful accounts | ||
Contracts receivable, net | $ 24,669,365 | $ 16,904,972 |
Contracts Receivables, Net (D_2
Contracts Receivables, Net (Details Textual) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Contracts Receivables, Net (Textual) | |||
Total contract revenue percentage | 100.00% | 86.00% | 90.00% |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Receivable, Net [Abstract] | |||
Accounts receivables | $ 2,953,585 | $ 1,715,607 | |
Allowance for doubtful accounts | (297,740) | (296,302) | $ (494,459) |
Accounts receivable, net | $ 2,655,845 | $ 1,419,305 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Beginning of the year | $ 296,302 | $ 494,459 | |
Recovery | (222,816) | ||
Provision | 7,913,442 | 187,715 | $ (227,873) |
Foreign exchange effect | (15,863) | 24,659 | |
Ending of the year | $ 297,740 | $ 296,302 | $ 494,459 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 46,009 | |
Finished goods | 251,869 | 1,309,830 |
Installation projects in process | 67,602 | 272,671 |
Inventory, net | $ 365,480 | $ 1,582,501 |
Prepayments and Advances to S_3
Prepayments and Advances to Suppliers, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Prepayments And Advance To Suppliers Net [Abstract] | |||
Advances made to raw material suppliers | [1] | $ 8,010,272 | $ 6,984,783 |
Advances made to construction subcontractors | [2] | 2,907,750 | 3,764,954 |
Advances made for purchases of equipment | 910,872 | 962,396 | |
Prepaid consulting fees | 841,216 | ||
Others | 3,906 | 43,393 | |
Subtotal | 11,832,800 | 12,596,742 | |
Allowance for doubtful accounts | (8,264,797) | (692,635) | |
Prepayments and advances to suppliers, net | $ 3,568,003 | $ 11,904,107 | |
[1] | The prepayments and deposits on raw materials are generally required by our suppliers for the purpose of ongoing business relationships. The prepayments and deposits are not directly associated with any specific purchase contract or any specific price but will be used to offset any accounts payable balance resulting from any specific purchase order priced at market. | ||
[2] | Advances to construction subcontracts represents the prepayments made by the Company to our construction subcontractors at the beginning of our customer projects for the purpose of acquiring necessary construction materials, equipment and required deposits. |
Prepayments and Advances to S_4
Prepayments and Advances to Suppliers, Net (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes Of Allowance For Doubtful Accounts For Advances To Suppliers [Roll Forward] | |||
Beginning balance | $ 692,635 | $ 272,858 | |
Provision | 7,609,244 | 386,563 | $ 19,284 |
Foreign exchange effect | (37,082) | 33,214 | |
Ending balance | $ 8,264,797 | $ 692,635 | $ 272,858 |
Prepayments and Advances to S_5
Prepayments and Advances to Suppliers, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Prepayments and Advances to Suppliers, Net (Textual) | |||
Bad debt | $ 7,609,244 | $ 386,563 | $ 18,717 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 14,998,846 | $ 16,963,086 |
Less: accumulated depreciation | (2,482,952) | (2,374,824) |
Property, plant and equipment, net | 12,515,894 | 14,588,262 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 11,032,207 | 11,656,259 |
Machinery equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 2,858,928 | 4,385,129 |
Transportation equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 518,612 | 567,757 |
Office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 37,518 | 18,963 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 551,582 | $ 334,978 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment, Net (Textual) | |||
Depreciation and amortization expense | $ 1,134,136 | $ 884,947 | $ 461,412 |
Loss on disposition of property and equipment | $ (283,487) | $ (12,179) | $ (228,245) |
Land Use Right (Details)
Land Use Right (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Land use right, net | $ 969,339 | $ 1,086,148 |
Use Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Land use right | 1,352,629 | 1,429,142 |
Less: accumulated amortization | (383,290) | (342,994) |
Land use right, net | $ 969,339 | $ 1,086,148 |
Land Use Right (Details 1)
Land Use Right (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Total estimated future amortization expenses | $ 969,339 | $ 1,086,148 |
Use Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2019 | 57,166 | |
2020 | 57,166 | |
2021 | 57,166 | |
2022 | 57,166 | |
2023 | 57,166 | |
Thereafter | 710,051 | |
Total estimated future amortization expenses | $ 969,339 | $ 1,086,148 |
Land Use Right (Details Textual
Land Use Right (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Land Use Right (Textual) | |||
Methods of amortization right | straight-line basis | ||
Useful life of land use right | 25 years | ||
Amortization expense | $ 61,025 | $ 55,048 | $ 55,990 |
Debt (Details)
Debt (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Debt Instrument [Line Items] | |||
Long-term loans | $ 1,698,058 | $ 872,852 | |
Less: current portion | (1,698,058) | 457,940 | |
Long term portion | 414,912 | ||
Debt Instrument Dated On April 13 Th 2016 To April 14 Th 2019 [Member] | Bank Of China Longwan Branch [Member] | |||
Debt Instrument [Line Items] | |||
Long-term loans | $ 202,894 | $ 262,009 | |
Effective Interest Rate | 5.70% | [1] | 5.70% |
Debt Instrument Dated On June 8 Th 2016 To April 14 Th 2019 [Member] | Bank Of China Longwan Branch [Member] | |||
Debt Instrument [Line Items] | |||
Long-term loans | $ 186,168 | $ 303,501 | |
Effective Interest Rate | 5.70% | [1] | 5.70% |
July 17, 2018 to July 17, 2019 [Member] | Industrial Bank Co. Ltd. Wenzhou Branch [Member] | |||
Debt Instrument [Line Items] | |||
Long-term loans | $ 727,220 | ||
Effective Interest Rate | 6.04% | ||
July 23, 2018 to July 17, 2019 [Member] | Longwan Rural Commercial Bank Shacheng Branch [Member] | |||
Debt Instrument [Line Items] | |||
Long-term loans | $ 290,888 | ||
Effective Interest Rate | 8.71% | ||
July 25, 2018 to July 17, 2019 [Member] | Longwan Rural Commercial Bank Shacheng Branch [Member] | |||
Debt Instrument [Line Items] | |||
Long-term loans | $ 290,888 | ||
Effective Interest Rate | 8.71% | ||
September 30, 2017 to September 28, 2018 [Member] | Longwan Rural Commercial Bank Shacheng Branch [Member] | |||
Debt Instrument [Line Items] | |||
Long-term loans | $ 307,342 | ||
Effective Interest Rate | 10.45% | ||
[1] | both loans from Bank of China Longwan Branch were fully repaid upon maturity. |
Debt (Details Textual)
Debt (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |||
Interest expense | $ 91,977 | $ 48,730 | $ 49,625 |
Bank Acceptance Notes Payable_2
Bank Acceptance Notes Payable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Bank acceptance notes payable | $ 2,117,382 | $ 55,322 |
Notes Payable | $ 2,117,382 | $ 55,322 |
Bank Acceptance Notes Payable_3
Bank Acceptance Notes Payable (Details Textual) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Restricted Cash | $ 2,124,655 | $ 55,322 |
Notes Payable | 2,117,382 | $ 55,322 |
China, Yuan Renminbi | ||
Restricted Cash | 14,600,000 | |
Notes Payable | $ 14,500,000 |
Sales Leaseback (Details)
Sales Leaseback (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Leases [Abstract] | ||
Total lease payment | $ 590,865 | |
Less: foreign exchange effect | (31,634) | |
Less: payments during the year | (168,589) | |
Total loan balance as of December 31, 2018 | 389,642 | |
Less: current portion of payment obligation | (177,291) | $ (179,182) |
Long term payable as of December 31, 2017 | $ 212,351 | $ 411,683 |
Sales Leaseback (Details 1)
Sales Leaseback (Details 1) | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 177,291 |
2020 | 156,939 |
2021 | 55,412 |
Total | $ 389,642 |
Sales Leaseback (Details Textua
Sales Leaseback (Details Textual) - USD ($) | Nov. 09, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Sale Leaseback Transaction [Line Items] | |||
Interest expense incurred | $ 85,186 | $ 8,223 | |
Sale Leaseback Agreement [Member] | Zhongli International Leasing Co Ltd Member | |||
Sale Leaseback Transaction [Line Items] | |||
Sale leaseback terms | 48 months | ||
Sale leaseback remaining lease term | 35 months | ||
Sale Leaseback Agreement [Member] | Zhongli International Leasing Co Ltd Member | China, Yuan Renminbi | |||
Sale Leaseback Transaction [Line Items] | |||
Proceeds from sale of machinery | $ 4,500,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Taxes Payable [Abstract] | ||
Income tax payable | $ 5,763,945 | $ 5,503,770 |
Value added tax payable | 2,024,902 | 351,098 |
Business tax payable | 878,133 | 978,130 |
Other taxes payable | 418,766 | 234,595 |
Total taxes payable | $ 9,085,746 | $ 7,067,593 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Current tax provision | $ 820,886 | $ 2,024,388 | $ 1,945,499 |
Current tax recovery | (4,974,763) | ||
Deferred tax provision (recovery) | (1,471,938) | 11,526 | 56,968 |
Total | $ (651,052) | $ (2,938,849) | $ 2,002,467 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Non-current: | |||
Provision for doubtful accounts | $ 1,648,967 | $ 247,324 | $ 191,913 |
Depreciation expense | 51,050 | ||
Total | $ 1,648,967 | $ 247,324 | $ 242,963 |
Income Taxes (Details 3)
Income Taxes (Details 3) - CHINA | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Income Tax Disclosure [Line Items] | ||||
China Income tax statutory rate | 25.00% | 25.00% | 25.00% | |
Effect of favorable income tax rate in certain entity in PRC | [1] | 4.00% | ||
Non-deductible items in China and others | 0.10% | 2.30% | 0.20% | |
Foreign loss not recognized in China | 9.70% | 6900.00% | ||
Effect of tax reversal for previous years | (166.30%) | |||
Effective tax rate | (11.20%) | (70.00%) | 25.20% | |
[1] | Xibolun Automation is subject to income tax rate of 15% starting from fiscal 2018. |
Income Taxes (DetailsTextual)
Income Taxes (DetailsTextual) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2014 |
Taxes Payable [Abstract] | ||||
Total accrued tax liabilities | $ 12,000,000 | $ 8,700,000 | ||
Reversal of accrued liabilities | $ 5,000,000 | |||
Amount of decrease in accrued tax liabilities | $ 7,000,000 | $ 12,000,000 | ||
Maximum potential contingent loss related to interest and penalties | $ 1,400,000 |
Concentration of Major Custom_2
Concentration of Major Customers and Suppliers (Details) | 12 Months Ended | ||
Dec. 31, 2018CustomersSub_contractorSupplierGeneral_contractor | Dec. 31, 2017CustomersSub_contractorSupplierGeneral_contractor | Dec. 31, 2016CustomersSub_contractorSupplierGeneral_contractor | |
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 100.00% | ||
Number of customers | Customers | 4 | 4 | 2 |
Number of sub contractor | Sub_contractor | 6 | 3 | 3 |
Number of suppliers | Supplier | 3 | 1 | 1 |
Number of general contractor | General_contractor | 2 | 2 | 2 |
Major Customer [Member] | Sales Revenue, Net [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 13.00% | 22.00% | |
Major Customer One [Member] | Sales Revenue, Net [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 12.00% | 21.00% | 11.00% |
Major Customer Two [Member] | Sales Revenue, Net [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 11.00% | 13.00% | 10.00% |
Major Customer Three [Member] | Sales Revenue, Net [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 10.00% | 10.00% | |
Sub-contractors [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 21.00% | 44.00% | 44.00% |
Sub Contractor One [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 19.00% | 18.00% | 22.00% |
Sub Contractor Two [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 18.00% | 16.00% | 15.00% |
Sub Contractor Three [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 16.00% | ||
Sub Contractor Four [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 15.00% | ||
Sub Contractor Five [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 11.00% | ||
General contractors [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 58.00% | 58.00% | |
General contractors One [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 42.00% | 42.00% | |
Supplier [Member] | Accounts Payable [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 34.00% | 18.00% | 10.00% |
Supplier [Member] | Advance to suppliers [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 17.00% | ||
Supplier One [Member] | Accounts Payable [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 21.00% | ||
Supplier Two [Member] | Accounts Payable [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 15.00% | ||
Contractor [Member] | Accounts Receivable [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 51.00% | ||
Contractor B [Member] | Accounts Receivable [Member] | |||
Concentration of Major Customers and Suppliers (Textual) | |||
Concentration risk, percentage | 45.00% |
Shareholders' Equity (Details T
Shareholders' Equity (Details Textual) - USD ($) | Apr. 06, 2015 | Dec. 26, 2016 | Apr. 29, 2015 | Dec. 31, 2018 | Dec. 31, 2016 |
Shareholders' Equity [Line Items] | |||||
Net value of shares issued in IPO | $ 10,131,690 | ||||
Number of shares issuance | 15,000,000 | ||||
Number of shares repurchase | 4,000,000 | ||||
Number of shares issued and outstanding | 12,000,000 | ||||
Description of stock split | The Company believes it is appropriate to reflect the 1:1000 stock split and repurchase that resulted in 12,000,000 shares of our common stock issued and outstanding on a retroactive basis similar to stock split or dividend pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all the periods presented. | ||||
Common Stock [Member] | |||||
Shareholders' Equity [Line Items] | |||||
Number of additional shares issued for nominal consideration | 15,000,000 | ||||
Number of shares repurchased | 4,000,000 | ||||
Description of stock split | The Board of Directors adopted a consent resolution to effectuate a 1:1000 stock split. | ||||
Common Stock [Member] | IPO [Member] | |||||
Shareholders' Equity [Line Items] | |||||
Number of shares issued in IPO | 2,695,347 | ||||
Price per shares issued in IPO | $ 4 | ||||
Value of shares issued in IPO before deducting placement agents' commissions and other offering expenses | $ 10,800,000 | ||||
Net value of shares issued in IPO | $ 10,100,000 |
Shareholders' Equity (Details_2
Shareholders' Equity (Details Textual 1) - USD ($) | Mar. 12, 2018 | Mar. 10, 2018 | Dec. 26, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 13, 2018 |
Shareholders' Equity [Line Items] | |||||||
Fair value of warrants | $ 181,000 | ||||||
Acquisition agreement description | The Company entered into a share acquisition agreement (the "Agreement") with the sole shareholder of Xuzhou Weijia Biotechnology Co., Ltd. ("Weijia") to acquire 49% of the equity in Weijia. Pursuant to the Agreement, the Company issued 1,442,778 unregistered Class A common shares (based on an agreed value of $2.00 per share, totalling $2,885,556) as a consideration to the individuals designated by the selling shareholder of Weijia. | ||||||
Equity investment | $ 3,054,090 | ||||||
Equity income investment | 116,138 | ||||||
Agreement service fee | $ 58,500 | ||||||
Unregistered common stock issued | 100,000 | 31,452 | |||||
Common stock compensation for services | 100,000 | ||||||
General and administrative expense | $ 181,000 | $ 3,298,188 | $ 3,683,594 | $ 932,911 | |||
Warrant [Member] | |||||||
Shareholders' Equity [Line Items] | |||||||
Percentage of warrant issued equal to the shares issued in the IPO | 5.00% | ||||||
Number of warrants issued | 134,768 | ||||||
Warrants term | 3 years | ||||||
Period threshold limit warrants exercisable | 6 months | ||||||
Exercise price of warrants | $ 4.80 | ||||||
Number of warrant outstanding | 134,768 | ||||||
Weighted average remaining life of warrants | 4 years | ||||||
Fair value of warrants | $ 488,730 | ||||||
Warrants fair value assumptions method used | Black-Scholes pricing model | ||||||
Risk free interest rate of warrants | 1.58% | ||||||
Expected term of warrants | 3 years | ||||||
Exercise price of warrants | $ 4.80 | ||||||
Expected volatility rate of warrants | 90.70% | ||||||
Expected dividend rate of warrants |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 213,332 |
2020 | 213,332 |
2021 | 213,332 |
2023 | 213,332 |
2023 and thereafter | 3,075,536 |
Total | $ 3,928,864 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) | 12 Months Ended |
Dec. 31, 2018Lease_Agreement | |
Commitments and Contingencies Disclosure [Abstract] | |
Number of lease agreements to rent office and facility for its operations | 2 |