Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | FULING GLOBAL INC. |
Entity Central Index Key | 0001637921 |
Document Type | 20-F |
Trading Symbol | FORK |
Document Period End Date | Dec. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2018 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 15,795,910 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 4,400,402 | $ 4,103,797 |
Restricted cash | 2,396,993 | 3,767,081 |
Certificates of deposit | 105,707 | |
Accounts receivable, net | 27,760,956 | 22,935,245 |
Advances to supplier, net | 1,255,420 | 509,770 |
Inventories, net | 22,274,613 | 19,320,066 |
Security deposits for sale leaseback | 771,814 | |
Prepaid expenses and other current assets | 1,394,234 | 2,185,961 |
Current assets from discontinued operation | 37,761 | 3,313,681 |
Total Current Assets | 59,520,379 | 57,013,122 |
Property, plant and equipment, net | 51,836,633 | 43,680,372 |
Intangible assets, net | 8,157,916 | 8,797,581 |
Prepayments for construction and equipment purchases | 1,222,888 | 527,568 |
Security deposits for sale leaseback - long term | 1,590,671 | 543,996 |
Other assets | 297,906 | 282,195 |
Non-current assets from discontinued operations | 13,697 | 5,884,799 |
Total Assets | 122,640,090 | 116,729,633 |
Current Liabilities: | ||
Short term borrowings | 19,890,641 | 27,417,082 |
Bank notes payable | 2,888,053 | 4,436,680 |
Advances from customers | 393,749 | 543,675 |
Accounts payable | 18,186,400 | 12,797,853 |
Accounts Payable-related party | 82,014 | |
Accrued and other liabilities | 2,121,304 | 2,794,584 |
Other payable - sale leaseback | 2,847,859 | 2,755,931 |
Taxes payable | 247,635 | 262,828 |
Deferred gains | 291,170 | 87,605 |
Due to Related party | 12,200 | |
Current liabilities from discontinued operation | 528,263 | 4,466,481 |
Total Current Liabilities | 47,489,288 | 55,562,719 |
Deferred tax liability | 577,826 | |
Long term payable - sale leaseback | 2,635,567 | 1,371,359 |
Long term borrowings | 7,203,357 | 1,801,887 |
Total Liabilities | 57,906,038 | 58,735,965 |
Commitments and contingencies | ||
Shareholders' Equity | ||
Common stock: $0.001 par value, 70,000,000 shares authorized, 15,795,910 and 15,780,205 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively | 15,797 | 15,781 |
Additional paid in capital | 30,009,545 | 29,904,285 |
Statutory reserve | 5,532,945 | 4,617,039 |
Retained earnings | 31,602,434 | 22,654,848 |
Accumulated other comprehensive income | (2,472,254) | 651,597 |
Total Fuling Global Inc.'s equity | 64,688,467 | 57,843,550 |
Non-controlling interest | 45,585 | 150,118 |
Total Shareholders' Equity | 64,734,052 | 57,993,668 |
Total Liabilities and Shareholders' Equity | $ 122,640,090 | $ 116,729,633 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 70,000,000 | 70,000,000 |
Common stock, shares issued | 15,795,910 | 15,780,205 |
Common stock, shares outstanding | 15,795,910 | 15,780,205 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Revenues | $ 138,664,272 | $ 124,208,506 | $ 102,320,689 |
Cost of goods sold | 108,914,256 | 98,077,100 | 77,129,454 |
Gross Profit | 29,750,016 | 26,131,406 | 25,191,235 |
Operating Expenses | |||
Selling expenses | 7,830,280 | 6,834,645 | 5,955,391 |
General and administrative expenses | 8,323,207 | 7,254,270 | 6,277,018 |
Research and development expenses | 3,430,529 | 2,953,477 | 2,355,449 |
Total operating expenses | 19,584,016 | 17,042,392 | 14,587,858 |
Income from Operations | 10,166,000 | 9,089,014 | 10,603,377 |
Other Income (Expense): | |||
Interest income | 32,810 | 57,477 | 27,870 |
Interest expense | (1,768,434) | (981,061) | (589,758) |
Subsidy income | 1,705,956 | 1,012,128 | 1,646,774 |
Investment loss | (8,667) | ||
Foreign currency transaction gain (loss) | 780,406 | (175,271) | 56,970 |
Other income, net | 65,926 | 51,607 | 65,260 |
Total other income (expense), net | 807,997 | (35,120) | 1,207,116 |
Income Before Income Taxes | 10,973,997 | 9,053,894 | 11,810,493 |
Provision for Income Taxes | 1,126,736 | 788,370 | 1,561,404 |
Net income from continuing operations | 9,847,261 | 8,265,524 | 10,249,089 |
Discontinued operation: | |||
Net loss from discontinued operations, net of tax | (88,302) | (1,974,852) | (2,306,036) |
Net income | 9,758,959 | 6,290,672 | 7,943,053 |
Less: net income (loss) attributable to non-controlling interest from continuing operations | (104,533) | 12,875 | 20 |
Net income attributable to Fuling Global Inc. | 9,863,492 | 6,277,797 | 7,943,033 |
Other Comprehensive Income | |||
Foreign currency translation income (loss) | (3,123,851) | 2,172,347 | (1,913,200) |
Comprehensive income attributable to Fuling Global Inc. | $ 6,739,641 | $ 8,450,144 | $ 6,029,833 |
Earnings per share - Basic and diluted | |||
Continuing operations | $ 0.62 | $ 0.52 | $ 0.65 |
Discontinued operations | $ (0.01) | $ (0.13) | $ (0.15) |
Weighted average number of shares - Basic and diluted | |||
Continuing operations and discontinued operations | 15,782,055 | 15,759,293 | 15,735,588 |
Consolidated Statements Of Chan
Consolidated Statements Of Changes In Shareholders' Equity - USD ($) | Total | Common Stock | Additional Paid in Capital | Statutory Reserve | Retained Earnings | Accumulated Other Comprehensive Income (loss) | Noncontrolling Interest |
Balance at Dec. 31, 2015 | $ 43,318,590 | $ 15,733 | $ 29,722,127 | $ 2,868,844 | $ 10,182,213 | $ 392,450 | $ 137,223 |
Balance, shares at Dec. 31, 2015 | 15,732,795 | ||||||
Issuance of common stock | 123,339 | $ 24 | 123,315 | ||||
Issuance of common stock, shares | 23,705 | ||||||
Net income | 7,943,053 | 7,943,033 | 20 | ||||
Appropriations to statutory reserve | 1,149,113 | (1,149,113) | |||||
Foreign currency translation loss/gain | (1,913,200) | (1,913,200) | |||||
Balance at Dec. 31, 2016 | 49,471,782 | $ 15,757 | 29,845,442 | 4,017,957 | 16,976,133 | (1,520,750) | 137,243 |
Balance, shares at Dec. 31, 2016 | 15,756,500 | ||||||
Issuance of common stock | 58,867 | $ 24 | 58,843 | ||||
Issuance of common stock, shares | 23,705 | ||||||
Net income | 6,290,672 | 6,277,797 | 12,875 | ||||
Appropriations to statutory reserve | 599,082 | (599,082) | |||||
Foreign currency translation loss/gain | 2,172,347 | 2,172,347 | |||||
Balance at Dec. 31, 2017 | 57,993,668 | $ 15,781 | 29,904,285 | 4,617,039 | 22,654,848 | 651,597 | 150,118 |
Balance, shares at Dec. 31, 2017 | 15,780,205 | ||||||
Issuance of common stock | 105,276 | $ 16 | 105,260 | ||||
Issuance of common stock, shares | 15,705 | ||||||
Net income | 9,758,959 | 9,863,492 | (104,533) | ||||
Appropriations to statutory reserve | 915,906 | (915,906) | |||||
Foreign currency translation loss/gain | (3,123,851) | (3,123,851) | |||||
Balance at Dec. 31, 2018 | $ 64,734,052 | $ 15,797 | $ 30,009,545 | $ 5,532,945 | $ 31,602,434 | $ (2,472,254) | $ 45,585 |
Balance, shares at Dec. 31, 2018 | 15,795,910 |
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 | $ 9,758,959 | $ 6,290,672 | $ 7,943,053 |
Net (loss) from discontinued operations | (88,302) | (1,974,852) | (2,306,036) |
Net income from continuing operations | 9,847,261 | 8,265,524 | 10,249,089 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock based compensation | 105,276 | 58,867 | 123,339 |
Deferred tax expense | 319,252 | ||
Depreciation and amortization | 4,406,888 | 3,611,510 | 2,354,193 |
Bad debt provisions (recovery) | (3,372) | 154,051 | (1,645) |
Unrealized (gains) losses | (4,849) | 34,417 | (60,225) |
Inventory reserve | 38,716 | 22,818 | 23,932 |
(Gain) loss on disposal of fixed assets | (30,981) | 43,172 | (12,687) |
Changes in operating assets: | |||
Accounts receivable | (5,547,070) | (2,414,707) | (6,742,328) |
Advances to suppliers | (733,643) | (40,504) | (251,704) |
Inventories | (3,805,026) | (3,408,394) | (3,262,302) |
Other assets | 704,459 | (1,969,564) | (5,159,033) |
Security deposit for sale leaseback | (359,340) | (523,839) | (755,934) |
Changes in operating liabilities: | |||
Accounts payable | 5,195,799 | (2,285,276) | 5,525,688 |
Accounts Payable-related party | 85,253 | ||
Advance from customers | (301,971) | (43,339) | 34,729 |
Deferred gains | 216,506 | (583,978) | 679,774 |
Deferred tax liability | 600,646 | ||
Taxes payable | (40,248) | (258,589) | (558,864) |
Accrued and other liabilities | (566,821) | 1,270,299 | 1,446,220 |
Net cash provided by operating activities from continuing operations | 9,807,483 | 1,932,468 | 3,951,494 |
Net cash provided by operating activities from discontinuing operations | 1,770,101 | 542,170 | 1,193,663 |
Net cash provided by operating activities | 11,577,584 | 2,474,638 | 5,145,157 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchase of property and equipment | (4,171,367) | (6,388,069) | (3,838,709) |
Additions to construction in progress | (9,878,241) | (10,231,413) | (12,679,337) |
Cash receipts from disposal property and equipment | 272,055 | 13,352 | 19,296 |
Cash increase in certificates of deposit | 103,967 | 1,479,874 | 1,505,061 |
Payments of construction and equipment purchase | (752,299) | (480,689) | (1,996,510) |
Repayments of deposit and prepayments for construction and equipment purchase | 1,358,566 | 1,354,585 | |
Purchase of intangible assets | (6,589) | (2,602) | (8,298,564) |
Cash from discontinued business | (18,684) | 64,208 | 435,085 |
Net cash (used in) investing activities from continuing operations | (14,451,158) | (14,186,773) | (23,499,093) |
Net cash provided by (used in) investing activities from discontinuing operations | 5,719,074 | (159,086) | (149,403) |
Net cash (used in) investing activities | (8,732,084) | (14,345,859) | (23,648,496) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from short-term borrowings | 33,213,599 | 31,239,350 | 23,677,701 |
Repayments of short-term borrowings | (39,629,404) | (20,342,692) | (18,538,408) |
Proceeds from long-term borrowings | 5,631,163 | 1,048,749 | 836,471 |
Proceeds from bank notes payable | 5,947,885 | 7,002,823 | 5,255,076 |
Repayments of bank notes payable | (7,309,428) | (4,871,021) | (5,431,761) |
Repayment of third party borrowing | (180,611) | ||
Proceeds from loans from related parties | 55,484 | ||
Repayments of loans from related parties | (24,930) | (57,148) | |
Proceeds from other payable - sales lease back | 5,784,874 | 2,906,977 | 3,941,746 |
Repayments of other payable - sales lease back | (4,144,246) | (2,638,787) | (172,154) |
Net cash provided by (used in) financing activities from continuing operations | (530,487) | 14,288,251 | 9,443,544 |
Net cash (used in) financing activities from discontinuing operations | (2,241,606) | (450,272) | (1,463,718) |
Net cash provided by (used in) financing activities | (2,772,093) | 13,837,979 | 7,979,826 |
EFFECT OF EXCHANGE RATES CHANGES ON CASH AND CASH EQUIVALENTS | (1,146,890) | (356,466) | (400,727) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | (1,073,483) | 1,610,292 | (10,924,240) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR | 7,870,878 | 6,260,586 | 17,184,826 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | 6,797,395 | 7,870,878 | 6,260,586 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | 6,797,395 | 7,870,878 | 6,260,586 |
LESS: RESTRICTED CASH | 2,396,993 | 3,767,081 | 2,333,608 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 4,400,402 | 4,103,797 | 3,926,978 |
Cash paid during the year for: | |||
Interest paid | 1,329,377 | 836,401 | 762,868 |
Income tax paid | 331,997 | 1,433,998 | 2,331,173 |
Non-cash investing activities: | |||
Transfer from construction in progress to fixed assets | 9,918,862 | 15,545,784 | 1,209,221 |
Transfer from accounts payable to fixed assets | 851,966 | 1,162,202 | |
Transfer from advance payments to fixed assets | $ 170,281 | $ 191,868 | $ 296,853 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Description of Business [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Fuling Global Inc. (“Fuling Global”) is a Cayman Islands corporation established on January 19, 2015. Total Faith Holdings Limited (“Total Faith”) is a wholly-owned subsidiary of Fuling Global formed in accordance with laws and regulations of the British Virgin Islands in April 2004. Fuling Global and its subsidiary Total Faith are holding companies whose only asset, held through a subsidiary, is 100% of the registered capital of Taizhou Fuling Plastics Co., Ltd. (“Taizhou Fuling”), as well as 49% ownership of Domo Industry Inc. (“Domo”). Taizhou Fuling was established in October 1992 under the laws of the People’s Republic of China (“China” or “PRC”) with initial capital of $0.51 million. After several registered capital increases and capital contributions, the registered capital of Taizhou Fuling was increased to $21.36 million in November 2015. Taizhou Fuling has four wholly-owned subsidiaries, Zhejiang Great Plastics Technology Co., Ltd. (“Great Plastics”), Direct Link USA LLC (“Direct Link”), Fuling Plastic USA, Inc. (“Fuling USA”) and Wenling Changli Import and Export Co., Ltd (“Wenling Changli”), which was established in September 2016 in China. Great Plastics was incorporated in China in March 2010 and principally engaged in the production of straw items. Direct Link was incorporated in the State of Delaware in December 2011 and serves as an import trading company of Taizhou Fuling in the United States (“U.S.”). Fuling USA was incorporated in the Commonwealth of Pennsylvania in May 2014, as a wholly-owned subsidiary of Taizhou Fuling. In 2015 Fuling USA established the Company’s first production factory in the U.S., which principally engages in the production of plastic straw items. Prior to the incorporation of Fuling USA, Taizhou Fuling wholly owned another subsidiary incorporated in 2009 in the State of New York, named Fuling Plastics USA Inc. (“Old Fuling USA”). Old Fuling USA served as one of the trading entities of Taizhou Fuling in the U.S. until early 2014 and its business was discontinued and transferred over to the new Fuling USA when the Company decided to set up the new factory in Allentown, Pennsylvania. Old Fuling USA was dissolved on April 8, 2015. Domo is a U.S. company established in the State of New York in October 2007. Total Faith owns 49% of its equity interest. However, Total Faith holds 2 out of 3 seats and has a majority of the voting rights on the board of directors. The Board of Directors of Domo is the controlling decision-making body with respect to Domo instead of the equity holders. The number of seats in the Board empowers Total Faith the ability to control Domo’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring shareholders’ approval. In addition, Domo’s equity at risk is not sufficient to permit it to carry on its activities without additional subordinated financial support from Total Faith and Domo is highly relying on the financial support from the Company. Total Faith is obligated to absorb a majority of the risk of loss from Domo’s activities and to receive majority of Domo’s residual returns. Based on these facts, Total Faith has gained effective control over Domo and Domo is considered a Variable Interest Entity (“VIE”) under Accounting Standards Codification (“ASC”) 810-10-05-08A. Accordingly, Total Faith consolidates Domo’s operating results, assets and liabilities. Fuling Global, Total Faith, Domo, Taizhou Fuling and Taizhou Fuling’s subsidiaries (herein collectively referred to as the “Company”) are engaged in the production and distribution of plastic and paper serviceware in China, Europe and U.S. Products exported to the U.S. and Europe are primarily sold to major fast food restaurant chains and wholesalers. On November 22, 2018, Great Plastics signed sales contracts with a third party to sell the land and buildings previously used as one of its manufacturing factories in China (aka, the “Sanmen Factory”) for total cash consideration of RMB 40.2 million (approximately US$5.8 million) (see Note 5 and 6). The Company sold all related machines and equipment to Taizhou Fuling and Zhejiang Great New Materials Co., Ltd. (“Great NM”). Great NM is a company owned by direct relatives of Taizhou Fuling’s officials. The Company plans to dissolve Great Plastics in 2019. Certain prior period amounts of Great Plastics have been reclassified to conform to the current period presentation as discontinued operation. Such reclassifications had no effect on net income or cash flows as previously reported. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of Fuling Global, Total Faith, Taizhou Fuling and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has concluded that Domo is a VIE, based on the facts that Total Faith has a majority of voting rights on the board of directors and is obligated to absorb a majority of the risk of loss from Domo’s economic performance. Based on our evaluation of the VIE, we are the primary beneficiary of its risks and rewards; therefore, we consolidate Domo for financial reporting purposes. The following tables set forth the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIE, which were included in the Company’s consolidated balance sheets, statements of income and comprehensive income and cash flows: December 31, December 31, Current assets $ 4,395,466 $ 3,053,731 Non-current assets - - Total assets 4,395,466 3,053,731 Third-party liabilities (635,845 ) (575,935 ) Intercompany payables* (3,664,964 ) (2,189,169 ) Total liabilities (4,300,809 ) (2,765,104 ) Net assets $ 94,657 $ 288,627 * Payables to Taizhou Fuling are eliminated upon consolidation. For the years ended December 31, December 31, December 31, Revenue $ 10,858,274 $ 9,744,914 $ 7,928,478 Net income (loss) $ (204,967 ) $ 25,246 $ 39 For the years ended December 31, December 31, December 31, Net cash provided by (used in) operating activities $ (1,021,593 ) $ 296,037 $ (1,006,413 ) Net cash (used in) provided by financing activities* $ 1,475,795 $ (376,338 ) $ 1,153,126 Net (decrease) increase in cash and cash equivalents $ 454,202 $ (80,301 ) $ 146,713 * Intercompany financing activities are eliminated upon consolidation. The Company has the power to direct activities of the VIE and can have assets transferred freely out of the VIE without restrictions. Therefore, the Company considers that there is no asset of the VIE that can only be used to settle obligations of the VIE. The creditors of the VIE’s third-party liabilities do not have recourse to the general credit of the primary beneficiary in normal course of business. Non-controlling interests Non-controlling interests represents the individual shareholder’s proportionate share of 51% of equity interest in Domo. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company 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 revenues and expenses during the reporting period. These estimates are based on information as of the date of the financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant and equipment, intangible assets, and the recoverability of long-lived assets. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure short-term bank notes payable and bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. Upon the maturity of the bank acceptance notes and bank borrowings, the Company is required to deposit the remainder to the escrow account to settle the bank notes payable and bank borrowings. The notes payable and bank borrowings with security deposits are generally short term in nature due to their short maturity period of three months to one year; thus, restricted cash is classified as a current asset. As of December 31, 2018 and 2017, the Company had restricted cash of $2,396,993 and $3,767,081, respectively, of which $1,439,064 and $3,053,622, respectively, was related to the bank acceptance notes payable (see Note 8), and $649,675 and $565,821, respectively, was related to the letters of credit (see Note 11). The remaining $308,254 and $147,638, respectively, were related to other miscellaneous deposits made in bank. Certificates of Deposit As of December 31, 2018 and 2017, certificates of deposit with original maturities of more than three months amounted to $0 and $105,707, respectively. Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers with good credit standing with a maximum of 90 days and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Inventories Inventories are stated at the lower of cost or net realizable value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Property, Plant and Equipment Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Items Useful life Property and buildings 10–20 years Leasehold improvements Lesser of useful life and Machinery equipment 3–10 years Transportation vehicles 4–10 years Office equipment and furniture 3–5 years Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the statement of income in other income and expenses. Intangible Assets Intangible assets consist primarily of land use rights, trademark and patents. Under the PRC law, all land in the PRC is owned by the government and cannot be sold to an individual or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. These land use rights are sometimes referred to informally as “ownership.” Land use rights are stated at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Items Useful life Land use rights 50 years Trademarks 10 years Patents 7-10 years Impairment of Long-lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets as of December 31, 2018 and 2017. Revenue Recognition The Company follows paragraph 606 of the FASB Accounting Standards Codification for revenue recognition and ASU 2014-09. On January 1, 2018, the Company adopted ASU 2014-09, which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) Identify the Contract with a Customer, (2) Identify the Performance Obligations in the Contract, (3) Determine the Transaction Price, (4) Allocate the Transaction Price to the Performance Obligations in the Contract, and (5) Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation. Results for reporting periods beginning after January 1, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported under the previous accounting standards. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606, and there have not been any significant changes to our business processes, systems, or internal controls as a result of implementing the standard. Income Taxes The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company does not believe that there was any uncertain tax position at December 31, 2018 and 2017. To the extent applicable, the Company records interest and penalties as general and administrative expenses. The statute of limitations for the Company’s U.S. federal income tax returns and certain state income tax returns subject to examination by tax authorities for three years from the date of filing. As of December 31, 2018, the tax years ended December 31, 2014 through December 31, 2017 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. As of December 31, 2018, the tax years ended December 31, 2011 through December 31, 2017 for the Company’s U.S. subsidiaries remain open for statutory examination by U.S. tax authorities. Value Added Tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. Further, when exporting goods, the exporter is entitled to some or all of the refund of the VAT paid or assess. Since a majority of the Company’s products are exported to the U.S. and Europe, the Company is eligible for VAT refunds when the Company completes all the required tax filing procedures. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. Our financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in statement of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive income. The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: December 31, December 31, 2017 December 31, Period-end spot rate US $1=RMB 6.8776 US $1=RMB 6.5074 US $1=RMB 6.94477 Average rate US $1=RMB 6.6163 US $1=RMB 6.7578 US $1=RMB 6.64410 Fair Value of Financial Instruments ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets and liabilities. ● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, restricted cash, accounts receivable, advance to vendors, accounts payable, accrued expenses, advances from customers, notes payable to approximate the fair value of the respective assets and liabilities at December 31, 2018 and 2017 based upon the short-term nature of the assets and liabilities. The Company believes that the carrying amount of the short-term borrowings approximates fair value at December 31, 2018 and 2017 based on the terms of the borrowings and current market rates as the rate is reflective of the current market rate. Concentrations and Credit Risk A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies that require certain supporting documentation in order to affect the remittance. As of December 31, 2018 and 2017, $4,116,684 and $7,027,894, respectively, of the Company’s cash and cash equivalents, certificates of deposit and restricted cash were on deposit at financial institutions in the PRC 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. Substantially all of the Company’s sales are made to customers that are located primarily in the USA and Europe. The Company’s operating results could be adversely affected by the government policy on exporting business, foreign exchange rate fluctuation, and local market condition change. The Company has a concentration of its revenues and receivables with specific customers. For the year ended December 31, 2018, no customer accounted for more than 10% of total revenue. For the year ended December 31, 2017, one customer accounted for 12% of total revenue. As of December 31, 2018, one customer’s account receivable accounted for 14% of the total outstanding accounts receivable balance. As of December 31, 2017, one customer’ account receivable accounted for 18% of the total outstanding accounts receivable balance. For the year ended December 31, 2018, the Company purchased approximately 12% of its raw materials from its one largest supplier. For the year ended December 31, 2017, the Company purchased approximately 12% and 11% of its raw materials from its two largest suppliers, respectively. As of December 31, 2018, advanced payments to two major suppliers accounted for 20% and 15% of the total advance payments outstanding. As of December 31, 2017, no supplier accounted for more than 10% of the total advance payments outstanding. A loss of either of these customers or suppliers could adversely affect the operating results or cash flows of the Company. Risks and Uncertainties The major operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted On April 1, 2018, we adopted ASU 2016-18, Restricted Cash – A Consensus of the FASB Emerging Issues Task Force, (“ASU 2016-18”), which amends ASC 230, Statement of Cash Flows, to clarify guidance on the classification and presentation of restricted cash in the statement of cash flows using the full retrospective method. Adoption of this standard did not have a material impact on our consolidated financial statements. See our consolidated statements of cash flows for the reconciliation of cash presented in the statements of cash flows to the cash presented on the balance sheet. The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) effective April 1, 2018 using the retrospective transition method. The core principle of the new accounting standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the adoption of this new accounting standard resulted in increased disclosure, including qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Adoption of this standard did not result in significant changes to the Company’s accounting policies, business processes, systems or controls, or have a material impact on the Company’s financial position, results of operations and cash flows or related disclosures. As such, prior period financial statements were not recast. New Accounting Pronouncements Not Yet Adopted In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This ASU is effective for annual reporting periods beginning after December 15, 2018. Early adoption of this ASU is permitted. The Company does not expect adoption of this ASU to have a material impact on its Consolidated Financial Statements. In February 2016, the FASB issued ASU 2018-20, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing leases assets and lease liabilities on the balance sheet and disclosing key information about lease transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018. Early adoption of this ASU is permitted. The Company is evaluating the effect of the pronouncement on the financial statements. |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 3 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following: As of As of December 31, December 31, Trade accounts receivable $ 27,984,656 $ 23,127,679 Less: allowance for doubtful accounts (223,700 ) (192,434 ) Accounts receivable, net $ 27,760,956 $ 22,935,245 |
Inventory, Net
Inventory, Net | 12 Months Ended |
Dec. 31, 2018 | |
Inventory, Net [Abstract] | |
INVENTORY, NET | NOTE 4 – INVENTORY, NET Inventories consisted of the following: As of As of December 31, December 31, Raw materials $ 7,011,718 $ 4,587,519 Work-in-progress 1,387,111 1,594,096 Finished goods 14,047,720 13, 277,742 Less: inventory valuation allowance (171,936 ) (139,291 ) Total inventory $ 22,274,613 $ 19,320,066 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 5 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: As of As of December 31, December 31, Property and Buildings $ 26,766,432 $ 18,251,057 Leasehold improvement 2,376,165 1,862,388 Machinery and equipment (1) 34,006,697 31,985,871 Automobiles 1,006,032 1,021,208 Office and electric equipment 948,090 813,073 Subtotal 65,103,416 53,933,597 Construction in progress 2,393,006 2,570,443 Less: accumulated depreciation (15,659,789 ) (12,823,668 ) Property and equipment, net $ 51,836,633 $ 43,680,372 (1) A total amount of $11,787,174 machinery was related to the sale leaseback transaction (see Note 10). Depreciation expense was $4,227,620, $3,437,207 and $2,217,994 for the years ended December 31, 2018, 2017 and 2016, respectively. Construction in progress represents costs of construction incurred for the Company’s new plant and equipment. The Company started the first phase of the construction for its facility expansion in China (“Phase I”) in April 2016 in China. For the year ended December 31, 2017, construction in progress of approximately $19.3 million was completed and was transferred to property, plant and equipment for Phase I. In the beginning of August 2017, the Company started its second phase of the construction for its facility expansion in China (“Phase II”). Phase II includes construction of a new plant, an office building and two dormitory buildings. The construction is expected to be completed before the end of 2019 and the total construction cost of Phase II is expected to be $13.1 million. For the year ended December 31, 2018, construction in progress of approximately $9.9 million was completed and was transferred to property, plant and equipment for Phase II. The Company expects to fulfill the payments using cash generated from operating activities and additional loans borrowed from local banks in case any shortage of cash on hand in the future. On November 22, 2018, Great Plastics sold its manufacturing factories to an unrelated third party for total cash consideration of RMB 40.2 million (approximately US$5.8 million). The net book value of the plant and properties disposed in the transaction amounted to RMB 25.7 million (approximately US$3.7 million), and the net book value of the intangible assets disposed in the transaction amounted to RMB 8.1 million (approximately US$1.2 million). Tax payable related to this transaction amounted RMB 3.7 million (approximately US$0.5 million). Total net value disposed and tax amounted RMB 35.7 million (approximately US$5.4 million). Gain from disposal of plant and properties and of intangible assets amounted to approximately RMB 2.7 million (approximately US$0.4 million). |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2018 | |
Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS, NET | NOTE 6 – INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: As of As of December 31, December 31, Land use rights $ 8,731,398 $ 9,228,119 Trademarks 13,718 9,802 Patents 7,365 5,782 Total 8,752,481 9,243,703 Less: accumulated amortization (594,565 ) (446,122 ) Intangible assets, net $ 8,157,916 $ 8,797,581 Amortization expense was $179,268, $174,303 and $136,199 for the years ended December 31, 2018, 2017 and 2016, respectively. Land use right of Great was disposed by Great on November 22, 2018 (See Note 5). Estimated future amortization expense for intangible assets is as follows: Periods ending December 31, Amortization expense 2019 $ 176,191 2020 176,191 2021 175,991 2022 175,766 2023 175,331 Thereafter 7,278,446 $ 8,157,916 |
Short-Term and Long-Term Borrow
Short-Term and Long-Term Borrowings | 12 Months Ended |
Dec. 31, 2018 | |
Short-Term and Long-Term Borrowings [Abstract] | |
SHORT-TERM AND LONG-TERM BORROWINGS | NOTE 7 – SHORT-TERM AND LONG-TERM BORROWINGS Short-term Borrowings Short-term borrowings represent amounts due to various banks and other companies normally maturing within one year. The principal of the borrowings is due at maturity. Accrued interest is due either monthly or quarterly. Short-term borrowings consisted of the following: As of As of December 31, December 31, Agricultural Bank of China (“ABC”) (1) $ 8,622,194 $ 11,831,148 China Merchants Bank (“CMB”) (2) 1,696,441 3,073,424 Industrial and Commercial Bank of China (“ICBC”) (3) 4,557,315 4,019,908 Bank of China (“BOC”) (4) 2,724,793 2,274,333 East West Bank (“EWB”) (5) 2,000,000 2,000,000 Postal Savings Bank of China (“PSBC”) (6) - 4,046,597 Pennsylvania Industrial Development Authority – current portion of long-term borrowing (see “long-term borrowing” below) 89,898 88,339 East West Bank loan – current portion of long-term borrowing (see “long-term borrowing” below) 200,000 83,333 Total $ 19,890,641 $ 27,417,082 (1) During the year ended December 31, 2018, Taizhou Fuling entered into a series of short-term bank loan agreements with ABC for a total amount of $8,622,194. The terms of these loans are six months with variable interest rates based on the prevailing interest rates, respectively. The effective rates are from 4.57% to 5.15% per annum. During fiscal year 2017, Taizhou Fuling entered into a series of short-term bank loan agreements with ABC for a total amount of $11,831,148. The terms of these loans are six to twelve months with variable interest rates based on the prevailing interest rates. The effective rates were from 4.57% to 4.90% per annum. As of December 31, 2018, $11,831,148 of them had been repaid upon maturity. In February 2017, Great Plastics entered into a short-term bank loan agreement with ABC for $691,520. The terms of the loan are twelve months with a variable interest rate based on the prevailing interest rate. The effective rates are 5.66% per annum. This loan was fully repaid in July 2017 prior to its maturity. These loans were guaranteed by the assets of a third party guaranty company and a shareholder of the Company. The third party guaranty company charges 2% of total loan amount. (2) During year ended December 31, 2018, Taizhou Fuling entered into a series of short-term bank borrowing agreements with CMB for a total amount of approximately $6.3 million (RMB 43.4 million). The terms of these loans are five to twelve months with variable interest rates based on the prevailing interest rates. The effective rates were from 2.40% to 6.09% per annum. The loans are guaranteed by Special Plastics and Taizhou Fuling’s general manager and Chair of the Board. As of December 31, 2018, $4,586,234 had been repaid in full upon maturity. In January, March, July and December 2017, Taizhou Fuling entered into four short-term bank borrowing agreements for approximately $4.5 million (RMB 29.4 million) with CMB for twelve, six, six and twelve months, respectively. The effective rates were 6.09%, 2.67%, 1.99% and 6.09% per annum, respectively. The loans are guaranteed by Special Plastics and Taizhou Fuling’s general manager and Chair of the Board. As of December 31, 2018, these loans had been repaid in full upon maturity. (3) During the year ended December 31, 2018, Taizhou Fuling entered into a series of short-term loan agreements with ICBC for a total amount of $4,557,315. The terms of these loans are five to twelve months with the interest rates ranged from 3.47% to 5.44% per annum. During 2017, Taizhou Fuling entered into a series of short-term loan agreements with ICBC for a total amount of $7,092,174. The terms of these loans are five to twelve months with the interest rates ranged from 2.14% to 5.00% per annum. As of December 31, 2018, these loans had been repaid upon maturity. (4) During the year ended December 31, 2018 and the year ended December 31, 2017, Taizhou Fuling entered into a series of short-term bank borrowing agreements and other financing agreements with BOC. The terms of the loans are three to twelve months, with fixed interest rates based on London InterBank Offered Rate (“LIBOR”) (for loans dominated in USD) or prime loan rates issued by People’s Bank of China (for loans dominated in RMB), plus certain base points. The effective interest rates vary from 3.30% to 5.01% per annum. The loans to Taizhou Fuling are guaranteed by the Chief Executive Officer (“CEO”). (5) On March 9, 2017, Direct Link entered into a line of credit agreement with East West Bank for $2,000,000 for one year. The annual interest rate is equivalent to LIBOR rate plus 2.75%. Direct Link was required to make restricted deposit of $41,900 for one year (which was released in June 2018) with an initial interest rate of 3.76% per annum. The line of credit is guaranteed by Fuling Global. The agreements require Direct Link to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.40 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Direct Link will be measured semi-annually at December 31th and December 31st. Direct Link was not in compliance as of December 31, 2018. On April 7, 2017, Direct Link drew down $1,500,000 with the effective rate of 3.86% per annum. On December 1, 2017, Direct Link drew down another $500,000 with the effective rate of 4.45% per annum. Interest expense incurred on this loan for the year ended December 31, 2018 and 2017 were $47,955 and $14,942, respectively. On March 14, 2018, East West Bank approved to extend the loan to June 9, 2018. On June 26, 2018, East West Bank again approved to extend the loan to June 9, 2019. East West Bank had waived financial covenant violations as of December 31, 2018. (6) In January 2018, Taizhou Fuling entered into a short-term bank loan agreement with PSBC for $987,881. The terms of the loan are twelve months. The effective rates are 2.95% per annum. As of December 31, 2018, this loan had been repaid prior to its maturity. In November and December 2017, Taizhou Fuling entered into a series of short-term bank loan agreements with PSBC for $2,975,004 and $1,071,593, respectively. The terms of these loans are twelve and five months, respectively. The effective rates are 2.65% and 4.15% per annum, respectively. As of December 31, 2018, these loans had been repaid upon maturity. Long-term Borrowings Long-term borrowings represent amounts due to various banks and other companies normally maturing over one year. The principal of the borrowings is due at maturity. Accrued interest is due either monthly or quarterly. Long-term borrowings consisted of the following: As of As of December 31, December 31, Pennsylvania Industrial Development Authority – long term (1) $ 658,234 $ 748,132 Agricultural Bank of China (“ABC”) (2) 5,815,982 137,088 East West Bank (“EWB”) – long term (3) 729,141 916,667 Total $ 7,203,357 $ 1,801,887 (1) On September 28, 2016, Fuling USA entered into a ten-year Machinery and Equipment Loan Agreement with the Pennsylvania Industrial Development Authority for $937,600, with fixed interest rate of 1.75%. This loan has been collateralized by the machinery and equipment, worth approximately $1.72 million. As of December 31, 2018, the amount of long-term borrowing was $748,132, and it consists of $89,898 of which is due within a year and $658,234 that is due over a year. Future obligations for payments of this long-term loan are as below: Twelve months ended December 31, 2019 $ 89,898 2020 91,484 2021 93,098 2022 94,740 2023 96,411 Thereafter 282,501 Total $ 748,132 (2) In June 2018, Taizhou Fuling entered into two buyer’s credit Loan Agreements with Agriculture Bank of China Limited for total of $2,471,792 (RMB 17 million) for 36 months. In July 2018, Taizhou Fuling entered into three buyer’s credit Loan Agreements with Agriculture Bank of China Limited for total of $3,344,190 (RMB 23 million) for 36 months. The loan bears variable interest rates based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing, plus 13% of the prevailing interest rate. As of December 31, 2018, the amount of long-term borrowing was $5,815,982, and the effective rates were 5.37% and 5.23% per annum. The line of credit’s purpose is for inventory purchase. The line of credit is effective for the period from first day of loan to 36 months after the first day of loan. On October 31, 2016, Fuling USA entered into a buyer’s credit Loan Agreement with Agricultural Bank of China Limited for a line of credit in the amount of $5,903,723 (RMB 41 million) for 18 months. The loan bears a variable interest rate based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing, plus 6% of the prevailing interest rate. As of December 31, 2017, the amount of long-term borrowing was $137,088, and the effective rate was 5.30% per annum. The line of credit’s purpose is to acquire equipment. China Export & Credit Insurance Corporation provides insurance for the line of credit. The line of credit is effective for the period from first day of loan to 18 months after the first day of loan. As of December 31, 2018, this loan was fully repaid in full upon maturity. (3) On March 9, 2017, Fuling USA entered into a Delayed Draw Term Loan agreement with East West Bank for $1,000,000. The amount drawn will be turned into a 5-year term loan at LIBOR rate plus 3.00%. The loan is guaranteed by Fuling Global. Fuling USA is required to make a restricted deposit of $73,336 for one year with an initial interest rate of 4.19% per annum. The restricted deposit was increased to $121,639 in June 2018. The agreement requires Fuling USA to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.25 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Fuling USA’s compliance with these covenants will be reviewed semi-annually at December 31th and December 31th. Fuling USA was in compliance as of December 31, 2018. On April 7 and December 1, 2017, Fuling USA drew down $500,000 (April 2017 Loan) and $500,000 (December 2017 Loan), respectively. April 2017 loan will expire April 7, 2023 and December 2017 loan will expire on December 1, 2023. Both April 2017 loan and December 2017 loan require interest only payment for the first year and require interest and principal payments for years from second year to sixth year. The effective rate was 4.11% per annum. As of December 31, 2018, the amount of long-term borrowing was $929,141, and it consists of $200,000 of which is due within a year and $729,141 which is due over a year. Future obligations for payments of this long-term loan are as below: Twelve months ended December 31, 2019 $ 200,000 2020 200,000 2021 200,000 2022 200,000 2023 129,141 Thereafter - Total $ 929,141 As of December 31, 2018 and 2017, land use rights in the amount of $7,821,842 and $8,442,532, and property and buildings in the amount of $14,071,515 and $15,620,048, respectively, were pledged for all the above short-term and long-term borrowings. |
Bank Notes Payable
Bank Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Bank Notes Payable [Abstract] | |
BANK NOTES PAYABLE | NOTE 8 – BANK NOTES PAYABLE Short-term bank notes payables are lines of credit extended by banks that can be endorsed and assigned to vendors as payments for purchases. The notes payable are generally payable within six months. These short-term notes payable are guaranteed by the bank for their full face value. In addition, the banks usually require the Company to deposit a certain amount of cash (usually range from 30% to 100% of the face value of the notes) at the bank as a guarantee deposit, which is classified on the balance sheet as restricted cash. The Company had the following bank notes payable as of December 31, 2018: December 31, ICBC, due May 5, 2019 $ 286,902 ABC, due various dates from January 4, 2019 to June 27, 2019 2,601,151 Total $ 2,888,053 The Company had the following bank notes payable as of December 31, 2017: December 31, ICBC, due various dates from January 28, 2018 to May 27, 2018 $ 3,052,664 ABC, due various dates from February 10, 2018 to April 30, 2018 1,384,016 Total $ 4,436,680 As of December 31, 2018 and 2017, $1,439,063 and $3,053,622 cash deposits were held by banks as a guaranty for the notes payable, respectively. In addition, as of December 31, 2018 and 2017, notes payable totaling $1,448,990 and $1,383,058 were secured by the personal properties of the Company’s principal shareholders and third party individuals, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9 – INCOME TAXES The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Fuling Global and Total Faith are both offshore holding companies and are not subject to tax on income or capital gains under the laws of the Cayman Islands and British Virgin Islands, respectively. Taizhou Fuling and Great Plastics are incorporated in the PRC and are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the Corporate Income Tax Law of the People’s Republic of China, corporate income tax rate applicable to all companies, including both domestic and foreign-invested companies, is 25%. Taizhou Fuling was recognized as a High-technology Company by Chinese government and subject to a favorable income tax rate of 15% from year 2012 to 2018. $1,343,322, $715,087 and $231,733 income tax expenses were exempted for the years ended December 31, 2018, 2017 and 2016, respectively. Per share effect of the tax exemption was $0.09, $0.05 and $0.01 for the years ended December 31, 2018, 2017 and 2016, respectively. Domo, Fuling USA and Direct Link are incorporated in the United States and subject to the U.S. federal and state income tax. The following table summarizes income (loss) before income taxes and non-controlling interest allocation: For the year ended For the year ended For the year ended December 31, December 31, December 31, United States $ 599,898 $ 90,466 $ (2,381,347 ) Foreign 10,374,099 8,963,428 14,191,840 Total $ 10,973,997 $ 9,053,894 $ 11,810,493 Significant components of the income tax provision were as follows: For the year ended For the year ended For the year ended December 31, December 31, December 31, Current tax provision: United States $ - $ 4,455 $ - Foreign 595,461 783,915 1,561,404 Deferred tax provision: Foreign 531,275 - - Total $ 1,126,736 $ 788,370 $ 1,561,404 The deferred tax expense (benefit) is the change of deferred tax assets and deferred tax liabilities resulting from the temporary difference between tax and U.S. GAAP. Our operations in the U.S. have incurred a cumulative net operating loss of approximately $2,868,000, 3,468,000 and $3,554,000, respectively, as of December 31, 2018, 2017 and 2016. This carry-forward will expire if is not utilized by 2036. The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. For the years ended December 31, 2018, 2017 and 2016, management believes that the realization of the benefit arising from the losses of certain U.S. subsidiaries appears to be uncertain and may not be realizable in the near future. Therefore, 100% valuation allowances of $420,056, $605,081 and $625,742 have been provided against the deferred tax assets of these subsidiaries, respectively. A new tax regulation under the Provisional Regulations of The People’s Republic of China Concerning Income Tax on Enterprises promulgated by the PRC took effect on May 7, 2018. The new tax regulation allows companies to expense in full all machinery and equipment acquired between January 1, 2018 to December 31, 2020 instead of depreciate over depreciation period, except for any asset with unit price over $0.7 million (RMB 5 million). Thus, deferred tax liabilities resulted from the temporary difference. Until the end of 2018, the Company acquired new machinery and equipment of $3,852,713 (RMB 26.5 million) in total, which were qualified to be fully deducted from taxable income in 2018, and incurred the deferred tax liabilities of $577,826 as of December 31, 2018. On December 22, 2017, the U.S. enacted the “Tax Cuts and Jobs Act” (the “Act”). Under the provisions of the Act, the U.S. corporate tax rate decreased from 35% to 21%. Since the Company has a December 31 fiscal year-end, a U.S. statutory federal rate of 21% rate is applied to the provision for income tax from the fiscal year of 2018. The following table reconciles the statutory rates to the Company’s effective tax rate: For the year ended December 31, For the year ended December 31, For the year ended December 31, 2018 2017 2016 U.S. Statutory rates 21.0 % 34.0 % 34.0 % Foreign income not recognized in the U.S. (19.4 ) (32.5 ) (33.8 ) Foreign income tax rate 25.0 25.0 25.0 Effect of favorable income tax rate in certain entity in PRC (10.5 ) (8.1 ) (11.5 ) R&D tax credit (1) (3.5 ) (2.4 ) (1.5 ) Change in valuation allowance (1.7 ) (0.3 ) 8.0 Non-taxable permanent difference (2) (0.6 ) (7.0 ) 7.0 Effective tax rate 10.3 % 8.7 % 13.2 % (1) From 1 January 2018 to 31 December 2020, for R&D expenses incurred for new technology, new products, or new craftsmanship, an extra 75% of the actual expenses incurred are also tax-deductible as an incentive. (2) It represents expenses incurred by the Company that were not deductible for PRC income tax and income (loss) generated in countries with no income tax obligations. |
Sale Leaseback
Sale Leaseback | 12 Months Ended |
Dec. 31, 2018 | |
Sale Leaseback [Abstract] | |
SALE LEASEBACK | NOTE 10 – SALE LEASEBACK (1) In October 2016, The Company has entered into a sale leaseback arrangement and sold certain machinery located in China to an unrelated third party for approximately $3,651,346 (RMB 25,112,500), and subsequently leased back the machinery for 24 months for a total amount of approximately $3,804,092 (RMB 26,163,022). The Company was required to make a security deposit of approximately $730,269 (RMB 5,022,500) for the leaseback. The leaseback has been accounted for as a capital lease. The title of the machinery will be transferred back to the Company upon the last payment from the Company. A one-time processing fee of $23,223 (RMB 159,716) was paid by the Company related to this lease. Since the machinery was sold exceeding its carrying value, the Company also recognized a deferred gain of $180,849 (RMB 1,243,810) on this transaction, which will be amortized over 24 months as an income. In addition, unrecognized financing charge of $177,853 (RMB 1,223,203) was recognized for the capital lease, which will be amortized over 24 months as an interest expense. The Company repaid the lease as of December 31, 2018. All deferred gain and unrecognized financing charge were fully amortized as of December 31, 2018. The lease was fully repaid in June 2018 prior to its maturity: Total lease payment $ 3,804,106 Less: imputed interest and principal (3,804,106 ) Total current portion of sale leaseback obligation as of December 31, 2018 $ - Interest expense incurred for the years ended December 31, 2018, 2017 and 2016 amounted to $39,148, 128,069 and $14,858, respectively. (2) In May 2017, the Company has entered into another sale leaseback arrangement and sold certain machinery located in China to an unrelated third party for approximately $2,573,572 (RMB 17,700,000), and subsequently leased back the machinery for 36 months for a total amount of approximately $2,750,504 (RMB 18,916,864). The Company was required to make a security deposit of approximately $514,714 (RMB 3,540,000) for the leaseback. The leaseback has been accounted for as a capital lease. The title of the machinery will be transferred back to the Company upon the last payment from the Company. A one-time processing fee of $15,441 (RMB 106,200) was paid by the Company related to this lease. Since the machinery was sold under its carrying value, the Company also recognized a deferred loss of $241,206 (RMB 1,658,918) on this transaction, which will be amortized over 36 months as an expense. In addition, unrecognized financing charge of $96,954 (RMB 666,811) was recognized for the capital lease, which will be amortized over 36 months as an interest expense. The minimum payments for the remaining lease term of 17 months from December 31, 2018 to May 18, 2020 are as follows: Total lease payment $ 2,750,504 Less: imputed interest and principal (1,452,961 ) Total sale leaseback obligation as of December 31, 2018 1,297,543 Less: current portion of sale leaseback obligation (915,912 ) Long term payable - sale leaseback as of December 31, 2018 $ 381,631 According to the sale leaseback agreement, future obligations for payments of sale leaseback are as below: Twelve months ended December 31, 2018 2019 $ 915,912 2020 381,631 Total $ 1,297,543 Interest expense incurred for the years ended December 31, 2018, 2017 and 2016 amounted to $76,700, $64,231 and $0, respectively. (3) In February 2018, the Company has entered into another sale leaseback arrangement and sold certain machinery located in China to an unrelated third party for approximately $5,379,784 (RMB 37,000,000), and subsequently leased back the machinery for 36 months for a total amount of approximately $5,784,874 (RMB 39,786,052). The Company was required to make a security deposit of approximately $1,075,957 (RMB 7,400,000) for the leaseback. The leaseback has been accounted for as a capital lease. The title of the machinery will be transferred back to the Company upon the last payment from the Company. A one-time processing fee of $32,279 (RMB 222,000) was paid by the Company related to this lease. Since the machinery was sold under its carrying value, the Company also recognized a deferred gain of $403,158 (RMB 2,772,759) on this transaction, which will be amortized over 36 months as an expense. In addition, unrecognized financing charge of $277,503 (RMB 1,908,556) was recognized for the capital lease, which will be amortized over 36 months as an interest expense. The minimum payments for the remaining lease term of 26 months from December 31, 2018 to February 18, 2021 are as follows: Total lease payment $ 5,784,874 Less: imputed interest and principal (1,598,991 ) Total sale leaseback obligation as of December 31, 2018 4,185,883 Less: current portion of sale leaseback obligation (1,931,947 ) Long term payable - sale leaseback as of December 31, 2018 $ 2,253,936 According to the sale leaseback agreement, future obligations for payments of sale leaseback are as below: Twelve months ended December 31, 2019 $ 1,931,946 2020 1,931,946 2021 321,991 Total $ 4,185,883 Interest expense incurred for the years ended December 31, 2018, 2017 and 2016 amounted to $206,803, $0 and $0, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 – COMMITMENTS AND CONTINGENCIES Rent Commitment The Company’s subsidiary Fuling USA leases manufacturing facility under operating leases. Operating lease expense amounted to $534,589, $534,077 and $454,223 for the years ended December 31, 2018, 2017 and 2016, respectively. On December 20, 2018, the Company entered into a five year lease agreement with a third party for its manufacturing facility in Mexico (see Note 15). in Mexico. The rent expense is $10,514 for the year ended December 31, 2018. Future minimum lease payments under non-cancelable operating leases are as follows: Twelve months ended December 31, 2019 $ 866,971 2020 913,242 2021 864,040 2022 815,053 2023 528,395 Thereafter 196,931 Total $ 4,184,632 Letters of Credit As of December 31, 2018 and 2017, the Company had $5,147,960 and $6,546,920 outstanding in trade letters of credit, respectively. Purchase Commitment As of December 31, 2018, the Company had no purchase commitments for construction. These commitments represent the amount of agreements signed but yet not paid. Pursuant to the signed agreement, the payment is not due until the construction is completed, and there is no a fixed deadline for the completion of construction. Litigation The Company’s subsidiary Fuling USA is a defendant-counterclaimant in pending litigation in the District Court for the District of Connecticut in the U.S. The plaintiff asserted causes of action for breach of contract, trademark infringement and related unfair competition claims under the Lanham Act, trade secret misappropriation, interference with a business opportunity, breach of fiduciary duty, and violation of the Connecticut Unfair Trade Practices Act. Fuling USA filed an answer and counterclaims seeking declaratory judgment of non-infringement of the trademark, cancellation of the trademark registration, breach of contract, and unjust enrichment. Until the date of this filing, the litigation has not been closed but no material contingent liability was expected. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS The Company rents space from one of its related parties. For the years ended December 31, 2018, 2017 and 2016, the total rent expense was $55,715, $54,550 and $55,484, respectively. Due from a related party amounted to $28,242 and $0 as of December 31, 2018 and 2017, respectively. It is outstanding rent from Great NM. Accounts payable to Great NM amount to $82,014 and $0 as of December 31, 2018 and 2017, respectively. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
EQUITY | NOTE 13 EQUITY Statutory Reserve The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the surplus reserve are made at the discretion of the Board of Directors. As of December 31, 2018 and 2017, the balance of statutory reserve was $5,532,945 and $4,617,039, respectively. Share Issuance On November 18, 2018, the Company granted 15,705 shares to its Chief Financial Officer. On November 18, 2017, the Company granted 15,705 shares and 8,000 shares collectively to its Chief Financial Officer and two directors, respectively. On November 18, 2016, the Company granted 15,705 shares and 8,000 shares collectively to its Chief Financial Officer and two directors, respectively. On November 2, 2015, the Company granted 15,667 shares and 12,000 shares collectively to its Chief Financial Officer and three directors, respectively. On November 18, 2015, the Company granted 38 shares to its Chief Financial Officer. The Company recorded $105,276, $58,867 and $123,339 as stock based compensation expense for the years ended December 31, 2018, 2017 and 2016, respectively. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 14 – SEGMENT REPORTING ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different products. Based on management’s assessment, the Company has determined that it has only one operating segment as defined by ASC 280. The following table presents revenue by major products for the years ended December 31, 2018, 2017 and 2016, respectively. For the years ended December 31, December 31, December 31, Cutlery $ 66,558,851 $ 62,104,253 $ 53,206,758 Straws 23,572,926 18,631,276 14,324,897 Cups and plates 37,439,353 33,536,297 27,626,586 Others 11,093,142 9,936,680 7,162,448 Total $ 138,664,272 $ 124,208,506 $ 102,320,689 The following table presents revenue by geographic areas for the years ended December 31, 2018, 2017 and 2016, respectively. For the years ended December 31, December 31, December 31, Revenue from United States $ 118,307,987 $ 106,563,934 $ 92,729,983 Revenue from Europe 6,621,940 6,101,139 3,172,868 Revenue from Canada 1,635,667 1,943,946 982,106 Revenue from China 8,286,146 7,740,720 3,839,176 Revenue from other foreign countries 3,812,532 1,858,767 1,596,556 Total $ 138,664,272 $ 124,208,506 $ 102,320,689 Long-lived assets of $58,848,571 and $4,271,140 were located in China and the United States, respectively, as of December 31, 2018. Long-lived assets of $56,808,223 and $3,136,106 were located in China and the United States, respectively, as of December 31, 2017. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15 – SUBSEQUENT EVENTS In January to March 2019, the Company repaid approximately $5.2 million short term bank loans and $1.8 million notes payable that become due. The Company also borrowed approximately $7.4 million short term bank loans as well as approximately $2.0 million notes payable from various banks in China. All the loans and notes payable are guaranteed by its shareholders, related parties and third parties. In December 2018, the Company announced its plan to set up a manufacturing factory (the “Mexico Factory”) in Monterrey, Mexico. In December 2018, the Company signed a building lease with Interpuerto Industrial Park in Monterrey, Mexico and a service agreement with a local shelter service company to help with administrative, accounting, compliance, import/export, human resources, etc., at the Mexico Factory. Factory remodeling is expected to start in April 2019, followed by equipment installation and testing and worker recruitment in May. We expect that the first phase of the Mexico Factory will have an annual design capacity of 10,000 tons and will be primarily used for producing paper straws and plastic straws and paper cups serving the U.S. market. The Company expects to launch commercial production at the Mexico Factory around July 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements include the financial statements of Fuling Global, Total Faith, Taizhou Fuling and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has concluded that Domo is a VIE, based on the facts that Total Faith has a majority of voting rights on the board of directors and is obligated to absorb a majority of the risk of loss from Domo’s economic performance. Based on our evaluation of the VIE, we are the primary beneficiary of its risks and rewards; therefore, we consolidate Domo for financial reporting purposes. The following tables set forth the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIE, which were included in the Company’s consolidated balance sheets, statements of income and comprehensive income and cash flows: December 31, December 31, Current assets $ 4,395,466 $ 3,053,731 Non-current assets - - Total assets 4,395,466 3,053,731 Third-party liabilities (635,845 ) (575,935 ) Intercompany payables* (3,664,964 ) (2,189,169 ) Total liabilities (4,300,809 ) (2,765,104 ) Net assets $ 94,657 $ 288,627 * Payables to Taizhou Fuling are eliminated upon consolidation. For the years ended December 31, December 31, December 31, Revenue $ 10,858,274 $ 9,744,914 $ 7,928,478 Net income (loss) $ (204,967 ) $ 25,246 $ 39 For the years ended December 31, December 31, December 31, Net cash provided by (used in) operating activities $ (1,021,593 ) $ 296,037 $ (1,006,413 ) Net cash (used in) provided by financing activities* $ 1,475,795 $ (376,338 ) $ 1,153,126 Net (decrease) increase in cash and cash equivalents $ 454,202 $ (80,301 ) $ 146,713 * Intercompany financing activities are eliminated upon consolidation. The Company has the power to direct activities of the VIE and can have assets transferred freely out of the VIE without restrictions. Therefore, the Company considers that there is no asset of the VIE that can only be used to settle obligations of the VIE. The creditors of the VIE’s third-party liabilities do not have recourse to the general credit of the primary beneficiary in normal course of business. |
Non-controlling interests | Non-controlling interests Non-controlling interests represents the individual shareholder’s proportionate share of 51% of equity interest in Domo. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company 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 revenues and expenses during the reporting period. These estimates are based on information as of the date of the financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant and equipment, intangible assets, and the recoverability of long-lived assets. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure short-term bank notes payable and bank borrowings. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. Upon the maturity of the bank acceptance notes and bank borrowings, the Company is required to deposit the remainder to the escrow account to settle the bank notes payable and bank borrowings. The notes payable and bank borrowings with security deposits are generally short term in nature due to their short maturity period of three months to one year; thus, restricted cash is classified as a current asset. As of December 31, 2018 and 2017, the Company had restricted cash of $2,396,993 and $3,767,081, respectively, of which $1,439,064 and $3,053,622, respectively, was related to the bank acceptance notes payable (see Note 8), and $649,675 and $565,821, respectively, was related to the letters of credit (see Note 11). The remaining $308,254 and $147,638, respectively, were related to other miscellaneous deposits made in bank. |
Certificates of Deposit | Certificates of Deposit As of December 31, 2018 and 2017, certificates of deposit with original maturities of more than three months amounted to $0 and $105,707, respectively. |
Accounts Receivable | Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers with good credit standing with a maximum of 90 days and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. |
Property, Plant and Equipment | Property, Plant and Equipment Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Items Useful life Property and buildings 10–20 years Leasehold improvements Lesser of useful life and Machinery equipment 3–10 years Transportation vehicles 4–10 years Office equipment and furniture 3–5 years Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the statement of income in other income and expenses. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of land use rights, trademark and patents. Under the PRC law, all land in the PRC is owned by the government and cannot be sold to an individual or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. These land use rights are sometimes referred to informally as “ownership.” Land use rights are stated at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Items Useful life Land use rights 50 years Trademarks 10 years Patents 7-10 years |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets as of December 31, 2018 and 2017. |
Revenue Recognition | Revenue Recognition The Company follows paragraph 606 of the FASB Accounting Standards Codification for revenue recognition and ASU 2014-09. On January 1, 2018, the Company adopted ASU 2014-09, which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) Identify the Contract with a Customer, (2) Identify the Performance Obligations in the Contract, (3) Determine the Transaction Price, (4) Allocate the Transaction Price to the Performance Obligations in the Contract, and (5) Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation. Results for reporting periods beginning after January 1, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported under the previous accounting standards. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606, and there have not been any significant changes to our business processes, systems, or internal controls as a result of implementing the standard. |
Income Taxes | Income Taxes The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company does not believe that there was any uncertain tax position at December 31, 2018 and 2017. To the extent applicable, the Company records interest and penalties as general and administrative expenses. The statute of limitations for the Company’s U.S. federal income tax returns and certain state income tax returns subject to examination by tax authorities for three years from the date of filing. As of December 31, 2018, the tax years ended December 31, 2014 through December 31, 2017 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. As of December 31, 2018, the tax years ended December 31, 2011 through December 31, 2017 for the Company’s U.S. subsidiaries remain open for statutory examination by U.S. tax authorities. |
Value Added Tax ("VAT") | Value Added Tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. Further, when exporting goods, the exporter is entitled to some or all of the refund of the VAT paid or assess. Since a majority of the Company’s products are exported to the U.S. and Europe, the Company is eligible for VAT refunds when the Company completes all the required tax filing procedures. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. |
Foreign Currency Translation | Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. Our financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in statement of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive income. The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: December 31, December 31, 2017 December 31, Period-end spot rate US $1=RMB 6.8776 US $1=RMB 6.5074 US $1=RMB 6.94477 Average rate US $1=RMB 6.6163 US $1=RMB 6.7578 US $1=RMB 6.64410 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets and liabilities. ● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, restricted cash, accounts receivable, advance to vendors, accounts payable, accrued expenses, advances from customers, notes payable to approximate the fair value of the respective assets and liabilities at December 31, 2018 and 2017 based upon the short-term nature of the assets and liabilities. The Company believes that the carrying amount of the short-term borrowings approximates fair value at December 31, 2018 and 2017 based on the terms of the borrowings and current market rates as the rate is reflective of the current market rate. |
Concentrations and Credit Risk | Concentrations and Credit Risk A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies that require certain supporting documentation in order to affect the remittance. As of December 31, 2018 and 2017, $4,116,684 and $7,027,894, respectively, of the Company’s cash and cash equivalents, certificates of deposit and restricted cash were on deposit at financial institutions in the PRC 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. Substantially all of the Company’s sales are made to customers that are located primarily in the USA and Europe. The Company’s operating results could be adversely affected by the government policy on exporting business, foreign exchange rate fluctuation, and local market condition change. The Company has a concentration of its revenues and receivables with specific customers. For the year ended December 31, 2018, no customer accounted for more than 10% of total revenue. For the year ended December 31, 2017, one customer accounted for 12% of total revenue. As of December 31, 2018, one customer’s account receivable accounted for 14% of the total outstanding accounts receivable balance. As of December 31, 2017, one customer’ account receivable accounted for 18% of the total outstanding accounts receivable balance. For the year ended December 31, 2018, the Company purchased approximately 12% of its raw materials from its one largest supplier. For the year ended December 31, 2017, the Company purchased approximately 12% and 11% of its raw materials from its two largest suppliers, respectively. As of December 31, 2018, advanced payments to two major suppliers accounted for 20% and 15% of the total advance payments outstanding. As of December 31, 2017, no supplier accounted for more than 10% of the total advance payments outstanding. A loss of either of these customers or suppliers could adversely affect the operating results or cash flows of the Company. |
Risks and Uncertainties | Risks and Uncertainties The major operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted On April 1, 2018, we adopted ASU 2016-18, Restricted Cash – A Consensus of the FASB Emerging Issues Task Force, (“ASU 2016-18”), which amends ASC 230, Statement of Cash Flows, to clarify guidance on the classification and presentation of restricted cash in the statement of cash flows using the full retrospective method. Adoption of this standard did not have a material impact on our consolidated financial statements. See our consolidated statements of cash flows for the reconciliation of cash presented in the statements of cash flows to the cash presented on the balance sheet. The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) effective April 1, 2018 using the retrospective transition method. The core principle of the new accounting standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the adoption of this new accounting standard resulted in increased disclosure, including qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Adoption of this standard did not result in significant changes to the Company’s accounting policies, business processes, systems or controls, or have a material impact on the Company’s financial position, results of operations and cash flows or related disclosures. As such, prior period financial statements were not recast. New Accounting Pronouncements Not Yet Adopted In June 2018, the FASB issued ASU 2018-07, Compensation– Stock Compensation, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This ASU is effective for annual reporting periods beginning after December 15, 2018. Early adoption of this ASU is permitted. The Company does not expect adoption of this ASU to have a material impact on its Consolidated Financial Statements. In February 2016, the FASB issued ASU 2018-20, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing leases assets and lease liabilities on the balance sheet and disclosing key information about lease transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018. Early adoption of this ASU is permitted. The Company is evaluating the effect of the pronouncement on the financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of variable interest entities | December 31, December 31, Current assets $ 4,395,466 $ 3,053,731 Non-current assets - - Total assets 4,395,466 3,053,731 Third-party liabilities (635,845 ) (575,935 ) Intercompany payables* (3,664,964 ) (2,189,169 ) Total liabilities (4,300,809 ) (2,765,104 ) Net assets $ 94,657 $ 288,627 * Payables to Taizhou Fuling are eliminated upon consolidation. For the years ended December 31, December 31, December 31, Revenue $ 10,858,274 $ 9,744,914 $ 7,928,478 Net income (loss) $ (204,967 ) $ 25,246 $ 39 For the years ended December 31, December 31, December 31, Net cash provided by (used in) operating activities $ (1,021,593 ) $ 296,037 $ (1,006,413 ) Net cash (used in) provided by financing activities* $ 1,475,795 $ (376,338 ) $ 1,153,126 Net (decrease) increase in cash and cash equivalents $ 454,202 $ (80,301 ) $ 146,713 * Intercompany financing activities are eliminated upon consolidation. |
Schedule of estimated useful lives for property, plant and equipment | Items Useful life Property and buildings 10–20 years Leasehold improvements Lesser of useful life and Machinery equipment 3–10 years Transportation vehicles 4–10 years Office equipment and furniture 3–5 years |
Schedule of estimated useful lives for intangible assets | Items Useful life Land use rights 50 years Trademarks 10 years Patents 7-10 years |
Schedule of foreign currency translations | December 31, December 31, 2017 December 31, Period-end spot rate US $1=RMB 6.8776 US $1=RMB 6.5074 US $1=RMB 6.94477 Average rate US $1=RMB 6.6163 US $1=RMB 6.7578 US $1=RMB 6.64410 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net [Abstract] | |
Schedule of accounts receivable | As of As of December 31, December 31, Trade accounts receivable $ 27,984,656 $ 23,127,679 Less: allowance for doubtful accounts (223,700 ) (192,434 ) Accounts receivable, net $ 27,760,956 $ 22,935,245 |
Inventory, Net (Tables)
Inventory, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory, Net [Abstract] | |
Summary of inventories | As of As of December 31, December 31, Raw materials $ 7,011,718 $ 4,587,519 Work-in-progress 1,387,111 1,594,096 Finished goods 14,047,720 13, 277,742 Less: inventory valuation allowance (171,936 ) (139,291 ) Total inventory $ 22,274,613 $ 19,320,066 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net [Abstract] | |
Schedule of property, plant and equipment, net | As of As of December 31, December 31, Property and Buildings $ 26,766,432 $ 18,251,057 Leasehold improvement 2,376,165 1,862,388 Machinery and equipment (1) 34,006,697 31,985,871 Automobiles 1,006,032 1,021,208 Office and electric equipment 948,090 813,073 Subtotal 65,103,416 53,933,597 Construction in progress 2,393,006 2,570,443 Less: accumulated depreciation (15,659,789 ) (12,823,668 ) Property and equipment, net $ 51,836,633 $ 43,680,372 (1) A total amount of $11,787,174 machinery was related to the sale leaseback transaction (see Note 10). |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Intangible Assets, Net [Abstract] | |
Schedule of intangible assets, net | As of As of December 31, December 31, Land use rights $ 8,731,398 $ 9,228,119 Trademarks 13,718 9,802 Patents 7,365 5,782 Total 8,752,481 9,243,703 Less: accumulated amortization (594,565 ) (446,122 ) Intangible assets, net $ 8,157,916 $ 8,797,581 |
Schedule of estimated future amortization expense of intangible assets | Periods ending December 31, Amortization expense 2019 $ 176,191 2020 176,191 2021 175,991 2022 175,766 2023 175,331 Thereafter 7,278,446 $ 8,157,916 |
Short-Term and Long-Term Borr_2
Short-Term and Long-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Instrument [Line Items] | |
Schedule of short-term borrowings | As of As of December 31, December 31, Agricultural Bank of China (“ABC”) (1) $ 8,622,194 $ 11,831,148 China Merchants Bank (“CMB”) (2) 1,696,441 3,073,424 Industrial and Commercial Bank of China (“ICBC”) (3) 4,557,315 4,019,908 Bank of China (“BOC”) (4) 2,724,793 2,274,333 East West Bank (“EWB”) (5) 2,000,000 2,000,000 Postal Savings Bank of China (“PSBC”) (6) - 4,046,597 Pennsylvania Industrial Development Authority – current portion of long-term borrowing (see “long-term borrowing” below) 89,898 88,339 East West Bank loan – current portion of long-term borrowing (see “long-term borrowing” below) 200,000 83,333 Total $ 19,890,641 $ 27,417,082 (1) During the year ended December 31, 2018, Taizhou Fuling entered into a series of short-term bank loan agreements with ABC for a total amount of $8,622,194. The terms of these loans are six months with variable interest rates based on the prevailing interest rates, respectively. The effective rates are from 4.57% to 5.15% per annum. During fiscal year 2017, Taizhou Fuling entered into a series of short-term bank loan agreements with ABC for a total amount of $11,831,148. The terms of these loans are six to twelve months with variable interest rates based on the prevailing interest rates. The effective rates were from 4.57% to 4.90% per annum. As of December 31, 2018, $11,831,148 of them had been repaid upon maturity. In February 2017, Great Plastics entered into a short-term bank loan agreement with ABC for $691,520. The terms of the loan are twelve months with a variable interest rate based on the prevailing interest rate. The effective rates are 5.66% per annum. This loan was fully repaid in July 2017 prior to its maturity. These loans were guaranteed by the assets of a third party guaranty company and a shareholder of the Company. The third party guaranty company charges 2% of total loan amount. (2) During year ended December 31, 2018, Taizhou Fuling entered into a series of short-term bank borrowing agreements with CMB for a total amount of approximately $6.3 million (RMB 43.4 million). The terms of these loans are five to twelve months with variable interest rates based on the prevailing interest rates. The effective rates were from 2.40% to 6.09% per annum. The loans are guaranteed by Special Plastics and Taizhou Fuling’s general manager and Chair of the Board. As of December 31, 2018, $4,586,234 had been repaid in full upon maturity. In January, March, July and December 2017, Taizhou Fuling entered into four short-term bank borrowing agreements for approximately $4.5 million (RMB 29.4 million) with CMB for twelve, six, six and twelve months, respectively. The effective rates were 6.09%, 2.67%, 1.99% and 6.09% per annum, respectively. The loans are guaranteed by Special Plastics and Taizhou Fuling’s general manager and Chair of the Board. As of December 31, 2018, these loans had been repaid in full upon maturity. (3) During the year ended December 31, 2018, Taizhou Fuling entered into a series of short-term loan agreements with ICBC for a total amount of $4,557,315. The terms of these loans are five to twelve months with the interest rates ranged from 3.47% to 5.44% per annum. During 2017, Taizhou Fuling entered into a series of short-term loan agreements with ICBC for a total amount of $7,092,174. The terms of these loans are five to twelve months with the interest rates ranged from 2.14% to 5.00% per annum. As of December 31, 2018, these loans had been repaid upon maturity. (4) During the year ended December 31, 2018 and the year ended December 31, 2017, Taizhou Fuling entered into a series of short-term bank borrowing agreements and other financing agreements with BOC. The terms of the loans are three to twelve months, with fixed interest rates based on London InterBank Offered Rate (“LIBOR”) (for loans dominated in USD) or prime loan rates issued by People’s Bank of China (for loans dominated in RMB), plus certain base points. The effective interest rates vary from 3.30% to 5.01% per annum. The loans to Taizhou Fuling are guaranteed by the Chief Executive Officer (“CEO”). (5) On March 9, 2017, Direct Link entered into a line of credit agreement with East West Bank for $2,000,000 for one year. The annual interest rate is equivalent to LIBOR rate plus 2.75%. Direct Link was required to make restricted deposit of $41,900 for one year (which was released in June 2018) with an initial interest rate of 3.76% per annum. The line of credit is guaranteed by Fuling Global. The agreements require Direct Link to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.40 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Direct Link will be measured semi-annually at December 31th and December 31st. Direct Link was not in compliance as of December 31, 2018. On April 7, 2017, Direct Link drew down $1,500,000 with the effective rate of 3.86% per annum. On December 1, 2017, Direct Link drew down another $500,000 with the effective rate of 4.45% per annum. Interest expense incurred on this loan for the year ended December 31, 2018 and 2017 were $47,955 and $14,942, respectively. On March 14, 2018, East West Bank approved to extend the loan to June 9, 2018. On June 26, 2018, East West Bank again approved to extend the loan to June 9, 2019. East West Bank had waived financial covenant violations at December 31, 2018. (6) In January 2018, Taizhou Fuling entered into a short-term bank loan agreement with PSBC for $987,881. The terms of the loan are twelve months. The effective rates are 2.95% per annum. As of December 31, 2018, this loan had been repaid prior to its maturity. In November and December 2017, Taizhou Fuling entered into a series of short-term bank loan agreements with PSBC for $2,975,004 and $1,071,593, respectively. The terms of these loans are twelve and five months, respectively. The effective rates are 2.65% and 4.15% per annum, respectively. As of December 31, 2018, these loans had been repaid upon maturity. |
Schedule of long-term borrowings | As of As of December 31, December 31, Pennsylvania Industrial Development Authority – long term (1) $ 658,234 $ 748,132 Agricultural Bank of China (“ABC”) (2) 5,815,982 137,088 East West Bank (“EWB”) – long term (3) 729,141 916,667 Total $ 7,203,357 $ 1,801,887 (1) On September 28, 2016, Fuling USA entered into a ten-year Machinery and Equipment Loan Agreement with the Pennsylvania Industrial Development Authority for $937,600, with fixed interest rate of 1.75%. This loan has been collateralized by the machinery and equipment, worth approximately $1.72 million. As of December 31, 2018, the amount of long-term borrowing was $748,132, and it consists of $89,898 of which is due within a year and $658,234 that is due over a year. (2) In June 2018, Taizhou Fuling entered into two buyer’s credit Loan Agreements with Agriculture Bank of China Limited for total of $2,471,792 (RMB 17 million) for 36 months. In July 2018, Taizhou Fuling entered into three buyer’s credit Loan Agreements with Agriculture Bank of China Limited for total of $3,344,190 (RMB 23 million) for 36 months. The loan bears variable interest rates based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing, plus 13% of the prevailing interest rate. As of December 31, 2018, the amount of long-term borrowing was $5,815,982, and the effective rates were 5.37% and 5.23% per annum. The line of credit’s purpose is for inventory purchase. The line of credit is effective for the period from first day of loan to 36 months after the first day of loan. On October 31, 2016, Fuling USA entered into a buyer’s credit Loan Agreement with Agricultural Bank of China Limited for a line of credit in the amount of $5,903,723 (RMB 41 million) for 18 months. The loan bears a variable interest rate based on the prevailing interest rate set by the People’s Bank of China at the time of borrowing, plus 6% of the prevailing interest rate. As of December 31, 2017, the amount of long-term borrowing was $137,088, and the effective rate was 5.30% per annum. The line of credit’s purpose is to acquire equipment. China Export & Credit Insurance Corporation provides insurance for the line of credit. The line of credit is effective for the period from first day of loan to 18 months after the first day of loan. As of December 31, 2018, this loan was fully repaid in full upon maturity. (3) On March 9, 2017, Fuling USA entered into a Delayed Draw Term Loan agreement with East West Bank for $1,000,000. The amount drawn will be turned into a 5-year term loan at LIBOR rate plus 3.00%. The loan is guaranteed by Fuling Global. Fuling USA is required to make a restricted deposit of $73,336 for one year with an initial interest rate of 4.19% per annum. The restricted deposit was increased to $121,639 in June 2018. The agreement requires Fuling USA to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.25 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Fuling USA’s compliance with these covenants will be reviewed semi-annually at December 31th and December 31th. Fuling USA was in compliance as of December 31, 2018. On April 7 and December 1, 2017, Fuling USA drew down $500,000 (April 2017 Loan) and $500,000 (December 2017 Loan), respectively. April 2017 loan will expire April 7, 2023 and December 2017 loan will expire on December 1, 2023. Both April 2017 loan and December 2017 loan require interest only payment for the first year and require interest and principal payments for years from second year to sixth year. The effective rate was 4.11% per annum. As of December 31, 2018, the amount of long-term borrowing was $929,141, and it consists of $200,000 of which is due within a year and $729,141 which is due over a year. |
Machinery and Equipment Loan Agreement [Member] | Pennsylvania Industrial Development Authority [Member] | |
Debt Instrument [Line Items] | |
Schedule of future obligations for payments of long-term loan | Twelve months ended December 31, 2019 $ 89,898 2020 91,484 2021 93,098 2022 94,740 2023 96,411 Thereafter 282,501 Total $ 748,132 |
Delayed Draw Term Loan Agreement [Member] | East West Bank - long term [Member] | |
Debt Instrument [Line Items] | |
Schedule of future obligations for payments of long-term loan | Twelve months ended December 31, 2019 $ 200,000 2020 200,000 2021 200,000 2022 200,000 2023 129,141 Thereafter - Total $ 929,141 |
Bank Notes Payable (Tables)
Bank Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Bank Notes Payable [Abstract] | |
Schedule of bank notes payable | December 31, ICBC, due May 5, 2019 $ 286,902 ABC, due various dates from January 4, 2019 to June 27, 2019 2,601,151 Total $ 2,888,053 December 31, ICBC, due various dates from January 28, 2018 to May 27, 2018 $ 3,052,664 ABC, due various dates from February 10, 2018 to April 30, 2018 1,384,016 Total $ 4,436,680 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of income (loss) before income taxes and non-controlling interest allocation | For the year ended For the year ended For the year ended December 31, December 31, December 31, United States $ 599,898 $ 90,466 $ (2,381,347 ) Foreign 10,374,099 8,963,428 14,191,840 Total $ 10,973,997 $ 9,053,894 $ 11,810,493 |
Schedule of significant components of income tax provision | For the year ended For the year ended For the year ended December 31, December 31, December 31, Current tax provision: United States $ - $ 4,455 $ - Foreign 595,461 783,915 1,561,404 Deferred tax provision: Foreign 531,275 - - Total $ 1,126,736 $ 788,370 $ 1,561,404 |
Schedule of table reconciles statutory rates to effective tax rate | For the year ended December 31, For the year ended December 31, For the year ended December 31, 2018 2017 2016 U.S. Statutory rates 21.0 % 34.0 % 34.0 % Foreign income not recognized in the U.S. (19.4 ) (32.5 ) (33.8 ) Foreign income tax rate 25.0 25.0 25.0 Effect of favorable income tax rate in certain entity in PRC (10.5 ) (8.1 ) (11.5 ) R&D tax credit (1) (3.5 ) (2.4 ) (1.5 ) Change in valuation allowance (1.7 ) (0.3 ) 8.0 Non-taxable permanent difference (2) (0.6 ) (7.0 ) 7.0 Effective tax rate 10.3 % 8.7 % 13.2 % (1) From 1 January 2018 to 31 December 2020, for R&D expenses incurred for new technology, new products, or new craftsmanship, an extra 75% of the actual expenses incurred are also tax-deductible as an incentive. (2) It represents expenses incurred by the Company that were not deductible for PRC income tax and income (loss) generated in countries with no income tax obligations. |
Sale Leaseback (Tables)
Sale Leaseback (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Sale Leaseback [Abstract] | |
Schedule of minimum payments for lease | The lease was fully repaid in June 2018 prior to its maturity: Total lease payment $ 3,804,106 Less: imputed interest and principal (3,804,106 ) Total current portion of sale leaseback obligation as of December 31, 2018 $ - The minimum payments for the remaining lease term of 17 months from December 31, 2018 to May 18, 2020 are as follows: Total lease payment $ 2,750,504 Less: imputed interest and principal (1,452,961 ) Total sale leaseback obligation as of December 31, 2018 1,297,543 Less: current portion of sale leaseback obligation (915,912 ) Long term payable - sale leaseback as of December 31, 2018 $ 381,631 The minimum payments for the remaining lease term of 26 months from December 31, 2018 to February 18, 2021 are as follows: Total lease payment $ 5,784,874 Less: imputed interest and principal (1,598,991 ) Total sale leaseback obligation as of December 31, 2018 4,185,883 Less: current portion of sale leaseback obligation (1,931,947 ) Long term payable - sale leaseback as of December 31, 2018 $ 2,253,936 |
Schedule of future obligations for payments of sale leaseback | According to the sale leaseback agreement, future obligations for payments of sale leaseback are as below: Twelve months ended December 31, 2018 2019 $ 915,912 2020 381,631 Total $ 1,297,543 According to the sale leaseback agreement, future obligations for payments of sale leaseback are as below: Twelve months ended December 31, 2019 $ 1,931,946 2020 1,931,946 2021 321,991 Total $ 4,185,883 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
Schedule of future minimum lease payments | Twelve months ended December 31, 2019 $ 866,971 2020 913,242 2021 864,040 2022 815,053 2023 528,395 Thereafter 196,931 Total $ 4,184,632 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of revenue by major products | For the years ended December 31, December 31, December 31, Cutlery $ 66,558,851 $ 62,104,253 $ 53,206,758 Straws 23,572,926 18,631,276 14,324,897 Cups and plates 37,439,353 33,536,297 27,626,586 Others 11,093,142 9,936,680 7,162,448 Total $ 138,664,272 $ 124,208,506 $ 102,320,689 |
Schedule of revenue by geographic areas | For the years ended December 31, December 31, December 31, Revenue from United States $ 118,307,987 $ 106,563,934 $ 92,729,983 Revenue from Europe 6,621,940 6,101,139 3,172,868 Revenue from Canada 1,635,667 1,943,946 982,106 Revenue from China 8,286,146 7,740,720 3,839,176 Revenue from other foreign countries 3,812,532 1,858,767 1,596,556 Total $ 138,664,272 $ 124,208,506 $ 102,320,689 |
Organization and Description _2
Organization and Description of Business (Details) $ in Thousands, ¥ in Millions | 1 Months Ended | ||||
Nov. 22, 2018USD ($) | Nov. 22, 2018CNY (¥) | Dec. 31, 2018 | Nov. 30, 2015USD ($) | Oct. 31, 1992USD ($) | |
Taizhou Fuling Plastics Co., Ltd. [Member] | |||||
Organization and Description of Business (Textual) | |||||
Ownership interest percentage | 100.00% | ||||
Registered capital | $ 21,360 | $ 510 | |||
Domo Industry Inc. [Member] | |||||
Organization and Description of Business (Textual) | |||||
Ownership interest percentage | 49.00% | ||||
Third Party [Member] | |||||
Organization and Description of Business (Textual) | |||||
Total cash consideration | $ 5,800 | ¥ 40.2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Variable Interest Entity [Line Items] | ||||
Total assets | $ 4,395,466 | $ 3,053,731 | ||
Total liabilities | (4,300,809) | (2,765,104) | ||
Net assets | 94,657 | 288,627 | ||
Revenue | 10,858,274 | 9,744,914 | $ 7,928,478 | |
Net income (loss) | (204,967) | 25,246 | 39 | |
Net cash provided by (used in) operating activities | (1,021,593) | 296,037 | (1,006,413) | |
Net cash (used in) provided by financing activities | [1] | 1,475,795 | (376,338) | 1,153,126 |
Net (decrease) increase in cash and cash equivalents | 454,202 | (80,301) | $ 146,713 | |
Domo [Member] | Current assets [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Total assets | 4,395,466 | 3,053,731 | ||
Domo [Member] | Non-current assets [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Total assets | ||||
Domo [Member] | Third-party liabilities [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Total liabilities | (635,845) | (575,935) | ||
Domo [Member] | Intercompany payables [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Total liabilities | [2] | $ (3,664,964) | $ (2,189,169) | |
[1] | Intercompany financing activities are eliminated upon consolidation. | |||
[2] | Payables to Taizhou Fuling are eliminated upon consolidation. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2018 | |
Property and buildings [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 20 years |
Property and buildings [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 10 years |
Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | Lesser of useful life and lease term |
Machinery equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 10 years |
Machinery equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Transportation vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 10 years |
Transportation vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 4 years |
Office equipment and furniture [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Office equipment and furniture [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2018 | |
Land use rights [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful live | 50 years |
Trademarks [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful live | 10 years |
Patents [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful live | 10 years |
Patents [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful live | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) |
Summary of Significant Accounting Policies [Abstract] | ||||||
Period-end spot rate | $ 1 | ¥ 6.8776 | $ 1 | ¥ 6.5074 | $ 1 | ¥ 6.94477 |
Average rate | $ 1 | ¥ 6.6163 | $ 1 | ¥ 6.7578 | $ 1 | ¥ 6.64410 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details Textual) | 12 Months Ended | |
Dec. 31, 2018USD ($)CustomerSupplier | Dec. 31, 2017USD ($)CustomerSupplier | |
Summary of Significant Accounting Policies (Textual) | ||
Restricted cash | $ 2,396,993 | $ 3,767,081 |
Certificates of deposit with original maturities of more than ninety days | 105,707 | |
Equity interest of individual shareholder's proportionate share | 51.00% | |
Maximum value added tax rate | 17.00% | |
Certificates of deposit and restricted cash on deposit in PRC | $ 4,116,684 | $ 7,027,894 |
Concentration risk percentage of advanced payments paid to major supplier | 10.00% | |
Revenue [Member] | Customer One [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Concentration risk, percentage | 10.00% | 12.00% |
Number of customers | Customer | 1 | |
Accounts Receivable [Member] | Customer One [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Concentration risk, percentage | 27.00% | 18.00% |
Number of customers | Customer | 1 | 1 |
Purchases [Member] | Major Supplier One [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Concentration risk, percentage | 12.00% | 12.00% |
Concentration risk percentage of advanced payments paid to major supplier | 20.00% | |
Number of suppliers | Supplier | 2 | 2 |
Purchases [Member] | Major Supplier Two [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Concentration risk, percentage | 11.00% | |
Concentration risk percentage of advanced payments paid to major supplier | 15.00% | |
Number of suppliers | Supplier | 2 | 2 |
Bank acceptance notes payable [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Restricted cash | $ 1,439,064 | $ 3,053,622 |
Letters of credit [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Restricted cash | 649,675 | 565,821 |
Miscellaneous deposits [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Restricted cash | $ 308,254 | $ 147,638 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts Receivable, Net [Abstract] | ||
Trade accounts receivable | $ 27,984,656 | $ 23,127,679 |
Less: allowance for doubtful accounts | (223,700) | (192,434) |
Accounts receivable, net | $ 27,760,956 | $ 22,935,245 |
Inventory, Net (Details)
Inventory, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory, Net [Abstract] | ||
Raw materials | $ 7,011,718 | $ 4,587,519 |
Work-in-progress | 1,387,111 | 1,594,096 |
Finished goods | 14,047,720 | 13,277,742 |
Less: inventory valuation allowance | (171,936) | (139,291) |
Total inventory | $ 22,274,613 | $ 19,320,066 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 65,103,416 | $ 53,933,597 | |
Construction in progress | 2,393,006 | 2,570,443 | |
Less: accumulated depreciation | (15,659,789) | (12,823,668) | |
Property and equipment, net | 51,836,633 | 43,680,372 | |
Property and Buildings [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 26,766,432 | 18,251,057 | |
Leasehold improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 2,376,165 | 1,862,388 | |
Machinery and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | [1] | 34,006,697 | 31,985,871 |
Automobiles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 1,006,032 | 1,021,208 | |
Office and electric equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 948,090 | $ 813,073 | |
[1] | A total amount of $11,787,174 machinery was related to the sale leaseback transaction (see Note 10). |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details Textual) ¥ in Millions | 1 Months Ended | 12 Months Ended | ||||
Nov. 22, 2018USD ($) | Nov. 22, 2018CNY (¥) | Aug. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Property, Plant and Equipment, Net (Textual) | ||||||
Amount of machinery related to sale leaseback | $ 11,787,174 | |||||
Construction in progress, description | The Company started the first phase of the construction for its facility expansion in China ("Phase I") in April 2016 in China. For the year ended December 31, 2017, construction in progress of approximately $19.3 million was completed and was transferred to property, plant and equipment for Phase I. | |||||
Total construction cost | $ 13,100,000 | |||||
Construction in progress, property, plant and equipment | $ 9,900,000 | |||||
Gain from disposal of plant and properties and of intangible assets | 30,981 | $ (43,172) | $ 12,687 | |||
Unrelated Third Party [Member] | ||||||
Property, Plant and Equipment, Net (Textual) | ||||||
Total cash consideration | $ 5,800,000 | ¥ 40.2 | ||||
Plant and properties disposed in the transaction | 3,700,000 | 25.7 | ||||
Intangible assets disposed in the transaction | 1,200,000 | 8.1 | ||||
Tax payable related to this transaction | 500,000 | 3.7 | ||||
Total net value disposed and tax | 5,400,000 | 35.7 | ||||
Gain from disposal of plant and properties and of intangible assets | $ 400,000 | ¥ 2.7 | ||||
Machinery [Member] | ||||||
Property, Plant and Equipment, Net (Textual) | ||||||
Depreciation expense | $ 4,227,620 | $ 3,437,207 | $ 2,217,994 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 8,752,481 | $ 9,243,703 |
Less: accumulated amortization | (594,565) | (446,122) |
Intangible assets, net | 8,157,916 | 8,797,581 |
Land use rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | 8,731,398 | 9,228,119 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | 13,718 | 9,802 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 7,365 | $ 5,782 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Intangible Assets, Net [Abstract] | ||
2019 | $ 176,191 | |
2020 | 176,191 | |
2021 | 175,991 | |
2022 | 175,766 | |
2023 | 175,331 | |
Thereafter | 7,278,446 | |
Intangible assets, net | $ 8,157,916 | $ 8,797,581 |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets, Net (Textual) | |||
Amortization expense | $ 179,268 | $ 174,303 | $ 136,199 |
Short-Term and Long-Term Borr_3
Short-Term and Long-Term Borrowings (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 19,890,641 | $ 27,417,082 | |
Agricultural Bank of China [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | [1] | 8,622,194 | 11,831,148 |
China Merchants Bank [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | [2] | 1,696,441 | 3,073,424 |
Industrial and Commercial Bank of China [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | [3] | 4,557,315 | 4,019,908 |
Bank of China [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | [4] | 2,724,793 | 2,274,333 |
East West Bank [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | [5] | 2,000,000 | 2,000,000 |
Postal Savings Bank of China [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | [6] | 4,046,597 | |
Pennsylvania Industrial Development Authority [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | 89,898 | 88,339 | |
East West Bank Loan [Member] | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 200,000 | $ 83,333 | |
[1] | During the year ended December 31, 2018, Taizhou Fuling entered into a series of short-term bank loan agreements with ABC for a total amount of $8,622,194. The terms of these loans are six months with variable interest rates based on the prevailing interest rates, respectively. The effective rates are from 4.57% to 5.15% per annum. During fiscal year 2017, Taizhou Fuling entered into a series of short-term bank loan agreements with ABC for a total amount of $11,831,148. The terms of these loans are six to twelve months with variable interest rates based on the prevailing interest rates. The effective rates were from 4.57% to 4.90% per annum. As of December 31, 2018, $11,831,148 of them had been repaid upon maturity. In February 2017, Great Plastics entered into a short-term bank loan agreement with ABC for $691,520. The terms of the loan are twelve months with a variable interest rate based on the prevailing interest rate. The effective rates are 5.66% per annum. This loan was fully repaid in July 2017 prior to its maturity. These loans were guaranteed by the assets of a third party guaranty company and a shareholder of the Company. The third party guaranty company charges 2% of total loan amount. | ||
[2] | During year ended December 31, 2018, Taizhou Fuling entered into a series of short-term bank borrowing agreements with CMB for a total amount of approximately $6.3 million (RMB 43.4 million). The terms of these loans are five to twelve months with variable interest rates based on the prevailing interest rates. The effective rates were from 2.40% to 6.09% per annum. The loans are guaranteed by Special Plastics and Taizhou Fuling's general manager and Chair of the Board. As of December 31, 2018, $4,586,234 had been repaid in full upon maturity. In January, March, July and December 2017, Taizhou Fuling entered into four short-term bank borrowing agreements for approximately $4.5 million (RMB 29.4 million) with CMB for twelve, six, six and twelve months, respectively. The effective rates were 6.09%, 2.67%, 1.99% and 6.09% per annum, respectively. The loans are guaranteed by Special Plastics and Taizhou Fuling's general manager and Chair of the Board. As of December 31, 2018, these loans had been repaid in full upon maturity. | ||
[3] | During the year ended December 31, 2018, Taizhou Fuling entered into a series of short-term loan agreements with ICBC for a total amount of $4,557,315. The terms of these loans are five to twelve months with the interest rates ranged from 3.47% to 5.44% per annum. During 2017, Taizhou Fuling entered into a series of short-term loan agreements with ICBC for a total amount of $7,092,174. The terms of these loans are five to twelve months with the interest rates ranged from 2.14% to 5.00% per annum. As of December 31, 2018, these loans had been repaid upon maturity. | ||
[4] | During the year ended December 31, 2018 and the year ended December 31, 2017, Taizhou Fuling entered into a series of short-term bank borrowing agreements and other financing agreements with BOC. The terms of the loans are three to twelve months, with fixed interest rates based on London InterBank Offered Rate ("LIBOR") (for loans dominated in USD) or prime loan rates issued by People's Bank of China (for loans dominated in RMB), plus certain base points. The effective interest rates vary from 3.30% to 5.01% per annum. The loans to Taizhou Fuling are guaranteed by the Chief Executive Officer ("CEO"). | ||
[5] | On March 9, 2017, Direct Link entered into a line of credit agreement with East West Bank for $2,000,000 for one year. The annual interest rate is equivalent to LIBOR rate plus 2.75%. Direct Link was required to make restricted deposit of $41,900 for one year (which was released in June 2018) with an initial interest rate of 3.76% per annum. The line of credit is guaranteed by Fuling Global. The agreements require Direct Link to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.40 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Direct Link will be measured semi-annually at December 31th and December 31st. Direct Link was not in compliance as of December 31, 2018. On April 7, 2017, Direct Link drew down $1,500,000 with the effective rate of 3.86% per annum. On December 1, 2017, Direct Link drew down another $500,000 with the effective rate of 4.45% per annum. Interest expense incurred on this loan for the year ended December 31, 2018 and 2017 were $47,955 and $14,942, respectively. On March 14, 2018, East West Bank approved to extend the loan to June 9, 2018. On June 26, 2018, East West Bank again approved to extend the loan to June 9, 2019. East West Bank had waived financial covenant violations at December 31, 2018. | ||
[6] | In January 2018, Taizhou Fuling entered into a short-term bank loan agreement with PSBC for $987,881. The terms of the loan are twelve months. The effective rates are 2.95% per annum. As of December 31, 2018, this loan had been repaid prior to its maturity. In November and December 2017, Taizhou Fuling entered into a series of short-term bank loan agreements with PSBC for $2,975,004 and $1,071,593, respectively. The terms of these loans are twelve and five months, respectively. The effective rates are 2.65% and 4.15% per annum, respectively. As of December 31, 2018, these loans had been repaid upon maturity. |
Short-Term and Long-Term Borr_4
Short-Term and Long-Term Borrowings (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Total | $ 7,203,357 | $ 1,801,887 | |
Pennsylvania Industrial Development Authority [Member] | |||
Debt Instrument [Line Items] | |||
Total | [1] | 658,234 | 748,132 |
Agricultural Bank of China [Member] | |||
Debt Instrument [Line Items] | |||
Total | [2] | 5,815,982 | 137,088 |
East West Bank - long term [Member] | |||
Debt Instrument [Line Items] | |||
Total | [3] | $ 729,141 | $ 916,667 |
[1] | On September 28, 2016, Fuling USA entered into a ten-year Machinery and Equipment Loan Agreement with the Pennsylvania Industrial Development Authority for $937,600, with fixed interest rate of 1.75%. This loan has been collateralized by the machinery and equipment, worth approximately $1.72 million. As of December 31, 2018, the amount of long-term borrowing was $748,132, and it consists of $89,898 of which is due within a year and $658,234 that is due over a year. | ||
[2] | In June 2018, Taizhou Fuling entered into two buyer's credit Loan Agreements with Agriculture Bank of China Limited for total of $2,471,792 (RMB 17 million) for 36 months. In July 2018, Taizhou Fuling entered into three buyer's credit Loan Agreements with Agriculture Bank of China Limited for total of $3,344,190 (RMB 23 million) for 36 months. The loan bears variable interest rates based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 13% of the prevailing interest rate. As of December 31, 2018, the amount of long-term borrowing was $5,815,982, and the effective rates were 5.37% and 5.23% per annum. The line of credit's purpose is for inventory purchase. The line of credit is effective for the period from first day of loan to 36 months after the first day of loan. On October 31, 2016, Fuling USA entered into a buyer's credit Loan Agreement with Agricultural Bank of China Limited for a line of credit in the amount of $5,903,723 (RMB 41 million) for 18 months. The loan bears a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 6% of the prevailing interest rate. As of December 31, 2017, the amount of long-term borrowing was $137,088, and the effective rate was 5.30% per annum. The line of credit's purpose is to acquire equipment. China Export & Credit Insurance Corporation provides insurance for the line of credit. The line of credit is effective for the period from first day of loan to 18 months after the first day of loan. As of December 31, 2018, this loan was fully repaid in full upon maturity. | ||
[3] | On March 9, 2017, Fuling USA entered into a Delayed Draw Term Loan agreement with East West Bank for $1,000,000. The amount drawn will be turned into a 5-year term loan at LIBOR rate plus 3.00%. The loan is guaranteed by Fuling Global. Fuling USA is required to make a restricted deposit of $73,336 for one year with an initial interest rate of 4.19% per annum. The restricted deposit was increased to $121,639 in June 2018. The agreement requires Fuling USA to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.25 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Fuling USA's compliance with these covenants will be reviewed semi-annually at December 31th and December 31th. Fuling USA was in compliance as of December 31, 2018. On April 7 and December 1, 2017, Fuling USA drew down $500,000 (April 2017 Loan) and $500,000 (December 2017 Loan), respectively. April 2017 loan will expire April 7, 2023 and December 2017 loan will expire on December 1, 2023. Both April 2017 loan and December 2017 loan require interest only payment for the first year and require interest and principal payments for years from second year to sixth year. The effective rate was 4.11% per annum. As of December 31, 2018, the amount of long-term borrowing was $929,141, and it consists of $200,000 of which is due within a year and $729,141 which is due over a year. |
Short-Term and Long-Term Borr_5
Short-Term and Long-Term Borrowings (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Total | $ 7,203,357 | $ 1,801,887 | |
Pennsylvania Industrial Development Authority [Member] | |||
Debt Instrument [Line Items] | |||
Total | [1] | 658,234 | 748,132 |
East West Bank - long term [Member] | |||
Debt Instrument [Line Items] | |||
Total | [2] | 729,141 | $ 916,667 |
Machinery and Equipment Loan Agreement [Member] | Pennsylvania Industrial Development Authority [Member] | |||
Debt Instrument [Line Items] | |||
2019 | 89,898 | ||
2020 | 91,484 | ||
2021 | 93,098 | ||
2022 | 94,740 | ||
2023 | 96,411 | ||
Thereafter | 282,501 | ||
Total | 748,132 | ||
Delayed Draw Term Loan Agreement [Member] | East West Bank - long term [Member] | |||
Debt Instrument [Line Items] | |||
2019 | 200,000 | ||
2020 | 200,000 | ||
2021 | 200,000 | ||
2022 | 200,000 | ||
2023 | 129,141 | ||
Thereafter | |||
Total | $ 929,141 | ||
[1] | On September 28, 2016, Fuling USA entered into a ten-year Machinery and Equipment Loan Agreement with the Pennsylvania Industrial Development Authority for $937,600, with fixed interest rate of 1.75%. This loan has been collateralized by the machinery and equipment, worth approximately $1.72 million. As of December 31, 2018, the amount of long-term borrowing was $748,132, and it consists of $89,898 of which is due within a year and $658,234 that is due over a year. | ||
[2] | On March 9, 2017, Fuling USA entered into a Delayed Draw Term Loan agreement with East West Bank for $1,000,000. The amount drawn will be turned into a 5-year term loan at LIBOR rate plus 3.00%. The loan is guaranteed by Fuling Global. Fuling USA is required to make a restricted deposit of $73,336 for one year with an initial interest rate of 4.19% per annum. The restricted deposit was increased to $121,639 in June 2018. The agreement requires Fuling USA to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.25 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Fuling USA's compliance with these covenants will be reviewed semi-annually at December 31th and December 31th. Fuling USA was in compliance as of December 31, 2018. On April 7 and December 1, 2017, Fuling USA drew down $500,000 (April 2017 Loan) and $500,000 (December 2017 Loan), respectively. April 2017 loan will expire April 7, 2023 and December 2017 loan will expire on December 1, 2023. Both April 2017 loan and December 2017 loan require interest only payment for the first year and require interest and principal payments for years from second year to sixth year. The effective rate was 4.11% per annum. As of December 31, 2018, the amount of long-term borrowing was $929,141, and it consists of $200,000 of which is due within a year and $729,141 which is due over a year. |
Short-Term and Long-Term Borr_6
Short-Term and Long-Term Borrowings (Details Textual) ¥ in Millions | Mar. 09, 2017 | Jul. 31, 2018USD ($) | Jun. 30, 2018USD ($) | Jan. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Nov. 30, 2017USD ($) | Jul. 31, 2017USD ($) | Mar. 31, 2017USD ($) | Jan. 31, 2017USD ($) | Oct. 31, 2016USD ($) | Sep. 28, 2016USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2018CNY (¥) | Jul. 31, 2018CNY (¥) | Jun. 30, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Jul. 31, 2017CNY (¥) | Mar. 31, 2017CNY (¥) | Feb. 28, 2017USD ($) | Jan. 31, 2017CNY (¥) | Oct. 31, 2016CNY (¥) | |
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Short-term bank loan | $ 4,436,680 | $ 2,888,053 | $ 4,436,680 | ||||||||||||||||||||
Long-term borrowing | 1,801,887 | 7,203,357 | 1,801,887 | ||||||||||||||||||||
Long-term Borrowing [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Long-term borrowing | 929,141 | ||||||||||||||||||||||
Long-term borrowing due | 200,000 | ||||||||||||||||||||||
Land use rights [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Collateral pledged for bank loans | 8,442,532 | 7,821,842 | 8,442,532 | ||||||||||||||||||||
Property and buildings [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Collateral pledged for bank loans | 15,620,048 | 14,071,515 | 15,620,048 | ||||||||||||||||||||
Agricultural Bank of China [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Short-term bank loan | $ 11,831,148 | 8,622,194 | $ 11,831,148 | ||||||||||||||||||||
Effective interest rate | 5.30% | 5.30% | 5.30% | ||||||||||||||||||||
Repaid amount | $ 11,831,148 | ||||||||||||||||||||||
Term of debt instrument | 36 months | 36 months | 18 months | 36 months | |||||||||||||||||||
Interest rate, description | The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 13% of the prevailing interest rate. | The prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 6% of the prevailing interest rate. | The effective rates were 5.37% and 5.23% per annum. | ||||||||||||||||||||
Long-term borrowing | [1] | $ 137,088 | $ 5,815,982 | $ 137,088 | |||||||||||||||||||
Line of credit | $ 3,344,190 | $ 2,471,792 | $ 5,903,723 | ¥ 23 | ¥ 17 | ¥ 41 | |||||||||||||||||
Line of credit, description | The line of credit is effective for the period from first day of loan to 18 months after the first day of loan. | ||||||||||||||||||||||
Agricultural Bank of China [Member] | Minimum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 4.57% | 4.57% | 4.57% | 4.57% | 4.57% | ||||||||||||||||||
Term of debt instrument | 6 months | ||||||||||||||||||||||
Agricultural Bank of China [Member] | Maximum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 4.90% | 5.15% | 4.90% | 5.15% | 4.90% | ||||||||||||||||||
Term of debt instrument | 12 months | ||||||||||||||||||||||
Agricultural Bank of China [Member] | Short Term Borrowing Agreement [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Short-term bank loan | $ 691,520 | ||||||||||||||||||||||
Effective interest rate | 5.66% | ||||||||||||||||||||||
Guaranty company charges | 2.00% | ||||||||||||||||||||||
China Merchants Bank [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Short-term bank loan | $ 4,500,000 | $ 4,500,000 | $ 4,500,000 | $ 4,500,000 | $ 6,300,000 | $ 4,500,000 | ¥ 43.4 | ¥ 29.4 | ¥ 29.4 | ¥ 29.4 | ¥ 29.4 | ||||||||||||
Effective interest rate | 6.09% | 1.99% | 2.67% | 6.09% | 6.09% | 6.09% | 1.99% | 2.67% | 6.09% | ||||||||||||||
Repaid amount | $ 4,586,234 | ||||||||||||||||||||||
Term of debt instrument | 12 months | 6 months | 6 months | 12 months | |||||||||||||||||||
China Merchants Bank [Member] | Minimum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 2.40% | 2.40% | |||||||||||||||||||||
Term of debt instrument | 5 months | ||||||||||||||||||||||
China Merchants Bank [Member] | Maximum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 6.09% | 6.09% | |||||||||||||||||||||
Term of debt instrument | 12 months | ||||||||||||||||||||||
Industrial and Commercial Bank of China [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Short-term bank loan | $ 7,092,174 | $ 4,557,315 | $ 7,092,174 | ||||||||||||||||||||
Industrial and Commercial Bank of China [Member] | Minimum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 2.14% | 3.47% | 2.14% | 3.47% | 2.14% | ||||||||||||||||||
Term of debt instrument | 5 months | 5 months | |||||||||||||||||||||
Industrial and Commercial Bank of China [Member] | Maximum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 5.00% | 5.44% | 5.00% | 5.44% | 5.00% | ||||||||||||||||||
Term of debt instrument | 12 months | 12 months | |||||||||||||||||||||
Bank of China [Member] | Minimum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 3.30% | 3.30% | 3.30% | 3.30% | 3.30% | ||||||||||||||||||
Term of debt instrument | 3 months | 3 months | |||||||||||||||||||||
Bank of China [Member] | Maximum [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Effective interest rate | 5.01% | 5.01% | 5.01% | 5.01% | 5.01% | ||||||||||||||||||
Term of debt instrument | 12 months | 12 months | |||||||||||||||||||||
East West Bank [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Long-term borrowing | [2] | $ 916,667 | $ 729,141 | $ 916,667 | |||||||||||||||||||
East West Bank [Member] | Long-term Borrowing [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Interest expense | 47,955 | 14,942 | |||||||||||||||||||||
East West Bank [Member] | Loan Agreement [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Long-term borrowing | 729,141 | ||||||||||||||||||||||
Line of credit, description | Fuling USA entered into a Delayed Draw Term Loan agreement with East West Bank for $1,000,000. The amount drawn will be turned into a 5-year term loan at LIBOR rate plus 3.00%. The loan is guaranteed by Fuling Global. Fuling USA is required to make a restricted deposit of $73,336 for one year with an initial interest rate of 4.19% per annum. The restricted deposit was increased to $121,639 in June 2018. The agreement requires Fuling USA to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.25 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Fuling USA's compliance with these covenants will be reviewed semi-annually at December 31th and December 31th. Fuling USA was in compliance as of December 31, 2018. On April 7 and December 1, 2017, Fuling USA drew down $500,000 (April 2017 Loan) and $500,000 (December 2017 Loan), respectively. April 2017 loan will expire April 7, 2023 and December 2017 loan will expire on December 1, 2023. Both April 2017 loan and December 2017 loan require interest only payment for the first year and require interest and principal payments for years from second year to sixth year. The effective rate was 4.11% per annum. | ||||||||||||||||||||||
Postal Savings Bank of China [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Short-term bank loan | $ 987,881 | $ 1,071,593 | $ 2,975,004 | $ 1,071,593 | |||||||||||||||||||
Effective interest rate | 2.95% | 4.15% | 2.65% | 4.15% | 4.15% | ||||||||||||||||||
Term of debt instrument | 12 months | 5 months | 12 months | ||||||||||||||||||||
Pennsylvania Industrial Development Authority [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Interest rate percentage | 1.75% | ||||||||||||||||||||||
Collateral pledged for bank loans | $ 1,720,000 | ||||||||||||||||||||||
Loan agreement | $ 937,600 | ||||||||||||||||||||||
Long-term borrowing | [3] | $ 748,132 | 658,234 | $ 748,132 | |||||||||||||||||||
Pennsylvania Industrial Development Authority [Member] | Loan Agreement [Member] | |||||||||||||||||||||||
Short-Term and Long-Term Borrowings (Textual) | |||||||||||||||||||||||
Useful life of machinery and equipment | 10 years | ||||||||||||||||||||||
Long-term borrowing | 748,132 | ||||||||||||||||||||||
Long-term borrowing due | $ 89,898 | ||||||||||||||||||||||
[1] | In June 2018, Taizhou Fuling entered into two buyer's credit Loan Agreements with Agriculture Bank of China Limited for total of $2,471,792 (RMB 17 million) for 36 months. In July 2018, Taizhou Fuling entered into three buyer's credit Loan Agreements with Agriculture Bank of China Limited for total of $3,344,190 (RMB 23 million) for 36 months. The loan bears variable interest rates based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 13% of the prevailing interest rate. As of December 31, 2018, the amount of long-term borrowing was $5,815,982, and the effective rates were 5.37% and 5.23% per annum. The line of credit's purpose is for inventory purchase. The line of credit is effective for the period from first day of loan to 36 months after the first day of loan. On October 31, 2016, Fuling USA entered into a buyer's credit Loan Agreement with Agricultural Bank of China Limited for a line of credit in the amount of $5,903,723 (RMB 41 million) for 18 months. The loan bears a variable interest rate based on the prevailing interest rate set by the People's Bank of China at the time of borrowing, plus 6% of the prevailing interest rate. As of December 31, 2017, the amount of long-term borrowing was $137,088, and the effective rate was 5.30% per annum. The line of credit's purpose is to acquire equipment. China Export & Credit Insurance Corporation provides insurance for the line of credit. The line of credit is effective for the period from first day of loan to 18 months after the first day of loan. As of December 31, 2018, this loan was fully repaid in full upon maturity. | ||||||||||||||||||||||
[2] | On March 9, 2017, Fuling USA entered into a Delayed Draw Term Loan agreement with East West Bank for $1,000,000. The amount drawn will be turned into a 5-year term loan at LIBOR rate plus 3.00%. The loan is guaranteed by Fuling Global. Fuling USA is required to make a restricted deposit of $73,336 for one year with an initial interest rate of 4.19% per annum. The restricted deposit was increased to $121,639 in June 2018. The agreement requires Fuling USA to comply with certain financial covenants and ratios, including to maintain minimum debt service coverage ratio of 1.25 times and to maintain maximum total debt to equity ratio of 3.0 times etc. Fuling USA's compliance with these covenants will be reviewed semi-annually at December 31th and December 31th. Fuling USA was in compliance as of December 31, 2018. On April 7 and December 1, 2017, Fuling USA drew down $500,000 (April 2017 Loan) and $500,000 (December 2017 Loan), respectively. April 2017 loan will expire April 7, 2023 and December 2017 loan will expire on December 1, 2023. Both April 2017 loan and December 2017 loan require interest only payment for the first year and require interest and principal payments for years from second year to sixth year. The effective rate was 4.11% per annum. As of December 31, 2018, the amount of long-term borrowing was $929,141, and it consists of $200,000 of which is due within a year and $729,141 which is due over a year. | ||||||||||||||||||||||
[3] | On September 28, 2016, Fuling USA entered into a ten-year Machinery and Equipment Loan Agreement with the Pennsylvania Industrial Development Authority for $937,600, with fixed interest rate of 1.75%. This loan has been collateralized by the machinery and equipment, worth approximately $1.72 million. As of December 31, 2018, the amount of long-term borrowing was $748,132, and it consists of $89,898 of which is due within a year and $658,234 that is due over a year. |
Bank Notes Payable (Details)
Bank Notes Payable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | ||
Total | $ 2,888,053 | $ 4,436,680 |
ICBC, due May 5, 2019 [Member] | ||
Short-term Debt [Line Items] | ||
Total | 286,902 | |
ABC, due various dates from January 4, 2019 to June 27, 2019 [Member] | ||
Short-term Debt [Line Items] | ||
Total | $ 2,601,151 | |
ABC, due various dates from February 10, 2018 to April 30, 2018 [Member] | ||
Short-term Debt [Line Items] | ||
Total | 1,384,016 | |
ICBC, due various dates from January 28, 2018 to May 27, 2018 [Member] | ||
Short-term Debt [Line Items] | ||
Total | $ 3,052,664 |
Bank Notes Payable (Details Tex
Bank Notes Payable (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Bank Notes Payable (Textual) | ||
Cash deposits | $ 1,439,063 | $ 3,053,622 |
Notes payable | $ 1,448,990 | $ 1,383,058 |
Maximum [Member] | ||
Bank Notes Payable (Textual) | ||
Percentage of cash deposit | 100.00% | |
Minimum [Member] | ||
Bank Notes Payable (Textual) | ||
Percentage of cash deposit | 30.00% |
Bank Notes Payable (Details T_2
Bank Notes Payable (Details Textual 1) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Industrial and Commercial Bank of China [Member] | ||
Short-term Debt [Line Items] | ||
Bank notes payable, description | Due May 5, 2019 | Due various dates from January 28, 2018 to May 27, 2018 |
Agricultural Bank of China [Member] | ||
Short-term Debt [Line Items] | ||
Bank notes payable, description | Due various dates from January 4, 2019 to June 27, 2019 | Due various dates from February 10, 2018 to April 30, 2018 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
United States | $ 599,898 | $ 90,466 | $ (2,381,347) |
Foreign | 10,374,099 | 8,963,428 | 14,191,840 |
Total | $ 10,973,997 | $ 9,053,894 | $ 11,810,493 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current tax provision | |||
United States | $ 4,455 | ||
Foreign | 595,461 | 783,915 | 1,561,404 |
Deferred tax provision | |||
Foreign | 531,275 | ||
Total | $ 1,126,736 | $ 788,370 | $ 1,561,404 |
Income Taxes (Details 2)
Income Taxes (Details 2) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Income Tax Disclosure [Abstract] | ||||
U.S. Statutory rates | 21.00% | 34.00% | 34.00% | |
Foreign income not recognized in the U.S. | (19.40%) | (32.50%) | (33.80%) | |
Foreign income tax rate | 25.00% | 25.00% | 25.00% | |
Effect of favorable income tax rate in certain entity in PRC | (10.50%) | (8.10%) | (11.50%) | |
R&D tax credit | [1] | (3.50%) | (2.40%) | (1.50%) |
Change in valuation allowance | (1.70%) | (0.30%) | 8.00% | |
Non-taxable permanent difference | [2] | (0.60%) | (7.00%) | 7.00% |
Effective tax rate | 10.30% | 8.70% | 13.20% | |
[1] | From 1 January 2018 to 31 December 2020, for R&D expenses incurred for new technology, new products, or new craftsmanship, an extra 75% of the actual expenses incurred are also tax-deductible as an incentive. | |||
[2] | It represents expenses incurred by the Company that were not deductible for PRC income tax and income (loss) generated in countries with no income tax obligations. |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Dec. 22, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes (Textual) | ||||
Income tax expenses exempted | $ 1,343,322 | $ 715,087 | $ 231,733 | |
Cumulative net operating loss | $ 2,868,000 | 3,468,000 | 3,554,000 | |
Favorable income tax rate, description | Taizhou Fuling was recognized as a High-technology Company by Chinese government and subject to a favorable income tax rate of 15% from year 2012 to 2018. | |||
Valuation allowance | $ 420,056 | $ 605,081 | $ 625,742 | |
Percentage of current year R&D expense deducted from taxable income | 75.00% | |||
Share price, per share | $ 0.09 | $ 0.05 | $ 0.01 | |
Corporate income tax rate | 25.00% | |||
Operating loss carryforwards expiration date | Dec. 31, 2036 | |||
U.S. statutory federal rate, percentage | 21.00% | 34.00% | 34.00% | |
Description of income tax | The new tax regulation allows companies to expense in full all machinery and equipment acquired between January 1, 2018 to December 31, 2020 instead of depreciate over depreciation period, except for any asset with unit price over $0.7 million (RMB 5 million). Thus, deferred tax liabilities resulted from the temporary difference. Until the end of 2018, the Company acquired new machinery and equipment of $3,852,713 (RMB 26.5 million) in total, which were qualified to be fully deducted from taxable income in 2018, and the deferred tax liabilities amounted $577,826 as of December 31, 2018. | |||
Maximum [Member] | ||||
Income Taxes (Textual) | ||||
Corporate income tax rate | 35.00% | |||
Minimum [Member] | ||||
Income Taxes (Textual) | ||||
Corporate income tax rate | 21.00% |
Sale Leaseback (Details)
Sale Leaseback (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Sale Leaseback [Abstract] | |
Total lease payment | $ 3,804,106 |
Less: imputed interest and principal | (3,804,106) |
Total current portion of sale leaseback obligation as of December 31, 2018 |
Sale Leaseback (Details 1)
Sale Leaseback (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Sale Leaseback Transaction [Line Items] | ||
Long term payable - sale leaseback as of December 31, 2018 | $ 2,635,567 | $ 1,371,359 |
Lease term of 17 [Member] | ||
Sale Leaseback Transaction [Line Items] | ||
Total lease payment | 2,750,504 | |
Less: imputed interest and principal | (1,452,961) | |
Total sale leaseback obligation as of December 31, 2018 | 1,297,543 | |
Less: current portion of sale leaseback obligation | (915,912) | |
Long term payable - sale leaseback as of December 31, 2018 | 381,631 | |
Lease term of 26 [Member] | ||
Sale Leaseback Transaction [Line Items] | ||
Total lease payment | 5,784,874 | |
Less: imputed interest and principal | (1,598,991) | |
Total sale leaseback obligation as of December 31, 2018 | 4,185,883 | |
Less: current portion of sale leaseback obligation | (1,931,947) | |
Long term payable - sale leaseback as of December 31, 2018 | $ 2,253,936 |
Sale Leaseback (Details 2)
Sale Leaseback (Details 2) | Dec. 31, 2018USD ($) |
Lease term of 17 [Member] | |
Twelve months ended December 31, | |
2019 | $ 915,912 |
2020 | 381,631 |
Total | 1,297,543 |
Lease term of 26 [Member] | |
Twelve months ended December 31, | |
2019 | 1,931,946 |
2020 | 1,931,946 |
2021 | 321,991 |
Total | $ 4,185,883 |
Sale Leaseback (Details Textual
Sale Leaseback (Details Textual) | 1 Months Ended | 12 Months Ended | ||||||||||
Feb. 28, 2018USD ($) | Feb. 28, 2018CNY (¥) | May 31, 2017USD ($) | May 31, 2017CNY (¥) | Oct. 31, 2016USD ($) | Oct. 31, 2016CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Feb. 28, 2018CNY (¥) | May 31, 2017CNY (¥) | Oct. 31, 2016CNY (¥) | |
Sale Leaseback (Textual) | ||||||||||||
Amount of machinery related to sale leaseback | $ 11,787,174 | |||||||||||
Sale leaseback transaction, lease terms | The minimum payments for the remaining lease term of 26 months from December 31, 2018 to February 18, 2021. | |||||||||||
Interest expense | $ 206,803 | $ 0 | $ 0 | |||||||||
Sale leaseback arrangement [Member] | ||||||||||||
Sale Leaseback (Textual) | ||||||||||||
Security deposit | $ 1,075,957 | ¥ 7,400,000 | $ 730,269 | ¥ 5,022,500 | ||||||||
One-time processing fee | 32,279 | ¥ 222,000 | 23,223 | ¥ 159,716 | ||||||||
Recognized deferred gain | $ 403,158 | $ 241,206 | $ 180,849 | ¥ 2,772,759 | ¥ 1,658,918 | ¥ 1,243,810 | ||||||
Sale leaseback transaction, lease terms | On this transaction, which will be amortized over 36 months as an expense. | On this transaction, which will be amortized over 36 months as an expense. | On this transaction, which will be amortized over 24 months as an income. | On this transaction, which will be amortized over 24 months as an income. | The minimum payments for the remaining lease term of 17 months from December 31, 2018 to May 18, 2020. | |||||||
Unrecognized financing charge | $ 277,503 | ¥ 1,908,556 | 96,954 | ¥ 666,811 | $ 177,853 | ¥ 1,223,203 | ||||||
Interest expense | $ 76,700 | 64,231 | 0 | |||||||||
Sale leaseback arrangement [Member] | Machinery equipment [Member] | ||||||||||||
Sale Leaseback (Textual) | ||||||||||||
Amount of machinery related to sale leaseback | 5,379,784 | 2,573,572 | 3,651,346 | ¥ 37,000,000 | ¥ 17,700,000 | ¥ 25,112,500 | ||||||
Total lease payment | $ 5,784,874 | ¥ 39,786,052 | 2,750,504 | 18,916,864 | $ 3,804,092 | ¥ 26,163,022 | ||||||
Security deposit | 514,714 | 514,714 | ||||||||||
One-time processing fee | $ 15,441 | ¥ 106,200 | ||||||||||
Sale leaseback transaction, lease terms | Subsequently leased back the machinery for 36 months. | Subsequently leased back the machinery for 36 months. | Subsequently leased back the machinery for 36 months. | Subsequently leased back the machinery for 36 months. | Subsequently leased back the machinery for 24 months. | Subsequently leased back the machinery for 24 months. | ||||||
Interest expense | $ 39,148 | $ 128,069 | $ 14,858 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Dec. 31, 2018USD ($) |
Twelve months ended December 31, | |
2019 | $ 866,971 |
2020 | 913,242 |
2021 | 864,040 |
2022 | 815,053 |
2023 | 528,395 |
Thereafter | 196,931 |
Total | $ 4,184,632 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Dec. 20, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies (Textual) | ||||
Operating lease expense | $ 10,514 | $ 534,589 | $ 534,077 | $ 454,223 |
Outstanding trade letters of credit | $ 5,147,960 | $ 6,546,920 | ||
Operating lease, description | The Company entered into a five year lease agreement with a third party for its manufacturing facility in Mexico (see Note 15). in Mexico. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions (Textual) | |||
Related party rent expense | $ 55,715 | $ 54,550 | $ 55,484 |
Accounts payable-related party | 85,253 | ||
Due from a related party | $ 82,014 | $ 0 |
Equity (Details)
Equity (Details) - USD ($) | 12 Months Ended | |||||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 18, 2018 | Nov. 18, 2017 | Nov. 18, 2016 | Nov. 18, 2015 | Nov. 02, 2015 | |
Equity (Textual) | ||||||||
Statutory reserves | $ 5,532,945 | $ 4,617,039 | ||||||
Stock based compensation expense | $ 105,276 | $ 58,867 | $ 123,339 | |||||
Chief Financial Officer [Member] | ||||||||
Equity (Textual) | ||||||||
Issuance of shares | 15,705 | 15,705 | 15,705 | 38 | 15,667 | |||
Two Directors [Member] | ||||||||
Equity (Textual) | ||||||||
Issuance of shares | 8,000 | 8,000 | ||||||
Three Directors [Member] | ||||||||
Equity (Textual) | ||||||||
Issuance of shares | 12,000 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 138,664,272 | $ 124,208,506 | $ 102,320,689 |
Cutlery [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 66,558,851 | 62,104,253 | 53,206,758 |
Straws [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 23,572,926 | 18,631,276 | 14,324,897 |
Cups and plates [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 37,439,353 | 33,536,297 | 27,626,586 |
Others [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 11,093,142 | $ 9,936,680 | $ 7,162,448 |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 138,664,272 | $ 124,208,506 | $ 102,320,689 |
Revenue from United States [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 118,307,987 | 106,563,934 | 92,729,983 |
Revenue from Europe (Member) | |||
Segment Reporting Information [Line Items] | |||
Revenues | 6,621,940 | 6,101,139 | 3,172,868 |
Revenue from Canada [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 1,635,667 | 1,943,946 | 982,106 |
Revenue from China [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 8,286,146 | 7,740,720 | 3,839,176 |
Revenue from other foreign countries [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 3,812,532 | $ 1,858,767 | $ 1,596,556 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 12 Months Ended | |
Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($) | |
Segment Reporting (Textual) | ||
Number of operating segments | Segment | 1 | |
China [Member] | ||
Segment Reporting (Textual) | ||
Long-lived assets | $ 58,848,571 | $ 56,808,223 |
United States [Member] | ||
Segment Reporting (Textual) | ||
Long-lived assets | $ 4,271,140 | $ 3,136,106 |
Subsequent Events (Details)
Subsequent Events (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 30, 2019USD ($) | Dec. 31, 2018USD ($)Tons | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Subsequent Events (Textual) | ||||
Repayments of short term bank loans | $ 7,309,428 | $ 4,871,021 | $ 5,431,761 | |
Repayments of notes payable | 39,629,404 | 20,342,692 | 18,538,408 | |
Proceeds from short term bank loans | 5,947,885 | 7,002,823 | 5,255,076 | |
Proceeds from notes payable | 33,213,599 | 31,239,350 | 23,677,701 | |
Proceeds from long term bank loans | $ 5,631,163 | $ 1,048,749 | $ 836,471 | |
Product capacity | Tons | 10,000 | |||
Subsequent Event [Member] | ||||
Subsequent Events (Textual) | ||||
Repayments of short term bank loans | $ 5,200,000 | |||
Repayments of notes payable | 1,800,000 | |||
Proceeds from short term bank loans | 7,400,000 | |||
Proceeds from long term bank loans | $ 2,000,000 |