Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Powerbridge Technologies Co., Ltd. |
Entity Central Index Key | 0001754323 |
Trading Symbol | PBTS |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2018 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Ex Transition Period | false |
Entity Shell Company | false |
Entity Emerging Growth Company | true |
Entity Common Stock, Shares Outstanding | 6,905,248 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
CURRENT ASSETS: | |||
Cash | $ 4,348,635 | $ 2,958,674 | |
Restricted cash | 669,525 | ||
Notes receivable | 309,796 | ||
Accounts receivable, net | 15,479,437 | 13,071,065 | |
Due from related parties | 154,083 | 3,073 | |
Prepayments, deposits and other current assets, net | 1,146,006 | 1,576,070 | |
Total Current Assets | 22,107,482 | 17,608,882 | |
Property and equipment, net | 4,707,112 | 3,432,569 | |
Restricted cash | 97,876 | ||
Prepayments, deposits and other assets, net | 865,498 | 624,093 | |
Deferred tax assets | 87,416 | 21,371 | |
Total Assets | 27,767,508 | 21,784,791 | |
CURRENT LIABILITIES: | |||
Bank loan | 1,527,162 | 230,507 | |
Notes payable | 467,806 | ||
Accounts payable | 16,231,682 | 12,123,486 | |
Customer deposits | 142,359 | 442,424 | |
Deferred revenue | 1,268,451 | 803,271 | |
Salaries and benefits payable | 836,558 | 1,104,885 | |
Due to related party | 615,481 | ||
Taxes payable | 867,610 | 1,253,245 | |
Total Current Liabilities | 21,341,628 | 16,573,299 | |
COMMITMENTS AND CONTINGENCIES | |||
EQUITY: | |||
Ordinary Shares, 0.00166667 par value; 30,000,000 shares authorized; 6,905,248 shares issued and outstanding as of December 31, 2018 and 2017 | [1] | 11,509 | 11,509 |
Shares subscription receivable | [1] | (11,509) | (11,509) |
Additional Paid-in Capital | 5,519,507 | 5,519,507 | |
Retained earnings (accumulated deficit) | 806,002 | (740,288) | |
Accumulated other comprehensive income | 100,371 | 439,201 | |
Total Powerbridge Technologies Co., Ltd.’s Shareholders’ Equity | 6,425,880 | 5,218,420 | |
Non-controlling interest | (6,928) | ||
Total Equity | 6,425,880 | 5,211,492 | |
Total Liabilities and Equity | $ 27,767,508 | $ 21,784,791 | |
[1] | Shares and per share data are presented on a retroactive basis to reflect the nominal share issuance and share split on August 18, 2018 and February 10, 2019. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value | $ 0.00166667 | $ 0.00166667 |
Ordinary shares, authorized | 30,000,000 | 30,000,000 |
Ordinary shares, issued | 6,905,248 | 6,905,248 |
Ordinary shares, outstanding | 6,905,248 | 6,905,248 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
REVENUES: | ||||
Total revenues | $ 23,152,267 | $ 21,628,554 | $ 21,174,801 | |
COST AND EXPENSES: | ||||
Total cost of revenues | 15,318,661 | 13,539,829 | 13,646,569 | |
GROSS PROFIT | 7,833,606 | 8,088,725 | 7,528,232 | |
Operating expenses: | ||||
Sales and marketing | 2,144,588 | 1,614,237 | 1,516,126 | |
General and administrative | 2,684,183 | 1,462,901 | 1,324,485 | |
Research and development | 1,992,228 | 1,151,985 | 947,506 | |
Total operating expenses | 6,820,999 | 4,229,123 | 3,788,117 | |
OPERATING INCOME FROM OPERATIONS | 1,012,607 | 3,859,602 | 3,740,115 | |
OTHER INCOME (EXPENSE) | ||||
Interest (expense) income | (21,446) | 20,740 | (18,201) | |
Other income | 612,188 | 540,149 | 272,812 | |
Other expense | (6,533) | (7,414) | (4,362) | |
Total other income, net | 584,209 | 553,475 | 250,249 | |
INCOME BEFORE INCOME TAXES | 1,596,816 | 4,413,077 | 3,990,364 | |
PROVISION FOR INCOME TAXES | 43,190 | 434,882 | 536,387 | |
NET INCOME | 1,553,626 | 3,978,195 | 3,453,977 | |
Less: Income (loss) attributable to non-controlling interests | 7,336 | (6,671) | ||
NET INCOME ATTRIBUTABLE TO POWERBRIDGE | 1,546,290 | 3,984,866 | 3,453,977 | |
OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Foreign currency translation adjustment | (339,238) | 221,132 | 10,444 | |
COMPREHENSIVE INCOME | 1,214,388 | 4,199,327 | 3,464,421 | |
Less: Comprehensive income (loss) attributable to non-controlling interest | 6,928 | (6,928) | ||
COMPREHENSIVE INCOME ATTRIBUTABLE TO POWERBRIDGE | $ 1,207,460 | $ 4,206,255 | $ 3,464,421 | |
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES | ||||
Basic and diluted | [1] | 6,905,248 | 6,905,248 | 6,905,248 |
EARNINGS PER SHARE | ||||
Basic and diluted | $ 0.22 | $ 0.58 | $ 0.5 | |
[1] | Shares and per share data are presented on a retroactive basis to reflect the nominal share issuance and share split on August 18, 2018 and February 10, 2019. |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Ordinary Shares | Share subscription receivable | Additional Paid-in Capital | Retained Earnings (accumulated deficit) | Non-controlling interest | Accumulated other comprehensive income | Total | |
Balance at Dec. 31, 2015 | $ 11,509 | $ (11,509) | $ 5,519,507 | $ (8,179,131) | $ 207,368 | $ (2,452,256) | ||
Balance, Shares at Dec. 31, 2015 | [1] | 6,905,248 | ||||||
Net income for the year | 3,453,977 | 3,453,977 | ||||||
Foreign currency translation adjustment | 10,444 | 10,444 | ||||||
Balance at Dec. 31, 2016 | $ 11,509 | (11,509) | 5,519,507 | (4,725,154) | 217,812 | 1,012,165 | ||
Balance, Shares at Dec. 31, 2016 | [1] | 6,905,248 | ||||||
Net income for the year | 3,984,866 | (6,671) | 3,978,195 | |||||
Foreign currency translation adjustment | (257) | 221,389 | 221,132 | |||||
Balance at Dec. 31, 2017 | $ 11,509 | (11,509) | 5,519,507 | (740,288) | (6,928) | 439,201 | 5,211,492 | |
Balance, Shares at Dec. 31, 2017 | [1] | 6,905,248 | ||||||
Net income for the year | 1,546,290 | 7,336 | 1,553,626 | |||||
Foreign currency translation adjustment | (408) | (338,830) | (339,238) | |||||
Balance at Dec. 31, 2018 | $ 11,509 | $ (11,509) | $ 5,519,507 | $ 806,002 | $ 100,371 | $ 6,425,880 | ||
Balance, Shares at Dec. 31, 2018 | [1] | 6,905,248 | ||||||
[1] | Shares and per share data are presented on a retroactive basis to reflect the nominal share issuance and share split on August 18, 2018 and February 10, 2019. |
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 | $ 1,553,626 | $ 3,978,195 | $ 3,453,977 |
Adjustments to reconcile net income from operations to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 643,265 | 313,554 | 134,350 |
Provision for doubtful accounts | 368,125 | 27,200 | 19,012 |
Loss from disposal of property and equipment | 1,994 | 7,414 | 4,362 |
Deferred tax provision (benefit) | (69,898) | 27,907 | (7,527) |
Changes in assets and liabilities: | |||
Notes receivable | (322,288) | ||
Accounts receivable | (3,606,159) | (7,328,948) | (3,116,816) |
Amount due from related parties | (157,270) | 44,393 | |
Prepayments, deposits and other assets | (766,322) | 241,028 | 187,086 |
Accounts payable | 4,949,114 | 4,018,111 | 4,076,070 |
Notes payable | 486,669 | ||
Salaries and benefits payable | (217,606) | 22,248 | (126,173) |
Taxes payable | (331,381) | 445,865 | 674,611 |
Deferred revenue | 528,679 | 319,604 | 2,699 |
Customer deposits | (287,523) | (784,317) | (171,004) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,773,025 | 1,332,254 | 5,130,647 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Other assets -loans to others | 844,554 | (439,409) | (171,263) |
Purchases of property and equipment | (2,162,385) | (1,835,643) | (1,243,062) |
Proceeds from disposal of property and equipment | 53,870 | 486 | |
NET CASH USED IN INVESTING ACTIVITIES | (1,317,831) | (2,221,182) | (1,413,839) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from bank loan | 1,588,742 | 221,965 | 150,509 |
Repayments on bank loan | (226,963) | (150,509) | |
Repayments of related party advances | (606,018) | (752,094) | (735,310) |
NET CASH PROVIDE BY (USED IN) FINANCING ACTIVITIES | 755,761 | (530,129) | (735,310) |
EFFECT OF EXCHANGE RATE CHANGES | (249,345) | 175,873 | (229,889) |
NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH | 1,961,610 | (1,243,184) | 2,751,609 |
CASH AND RESTRICTED CASH- beginning of year | 3,056,550 | 4,299,734 | 1,548,125 |
CASH AND RESTRICTED CASH - end of year | 5,018,160 | 3,056,550 | 4,299,734 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||
Interest | 19,385 | 22,134 | 3,665 |
Income taxes | 296,487 | 106,454 | 41,330 |
NON-CASH TRANSACTIONS OF INVESTING ACTIVITY | |||
Unpaid Furniture and fixture costs accrued | 108,458 | 29,371 | |
Cash | 4,348,635 | 2,958,674 | 4,299,734 |
Restricted cash | 669,525 | 97,876 | |
Total cash and restricted cash | $ 5,018,160 | $ 3,056,550 | $ 4,299,734 |
Nature of Business and Organiza
Nature of Business and Organization | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of business and organization | Note 1 — Nature of business and organization Powerbridge Technologies Co., Ltd. ("Powerbridge" or the "Company"), is a company that was established under the laws of the Cayman Islands on July 27, 2018 as a holding company. The Company, through its subsidiaries, is a provider of software application and technology services to corporate and government customers engaged in global trade. Mr. Ban Lor, the Company's Chairman of the Board, President and Chief Executive Officer ("CEO"), together with his brother, Mr. Stewart Lor, the Company's Chief Financial Officer ("CFO") are the ultimate Controlling Shareholders of the Company. Reorganization For the purpose of this Offering and listing on the NASDAQ Capital Market, a reorganization of the Company's legal structure was completed on August 27, 2018. The reorganization involved the incorporation of Powerbridge, a Cayman Islands holding company, and its wholly owned subsidiaries, Powerbridge Technologies Co., Limited ("Powerbridge HK"), a holding company incorporated on July 27, 2018 under the laws of Hong Kong; and the transfer of all equity ownership of Zhuhai Powerbridge Technology Co., Ltd. ("Powerbridge Zhuhai") to Powerbridge HK from the former shareholders of Powerbridge Zhuhai through an investment holding company. In consideration of the transfer, the Company issued 11,508,747 shares of the Company with par value 0.001 per share to the former shareholders of Powerbridge Zhuhai. On February 10, 2019, the board of directors approved a reverse stock split of the Company's authorized number of Ordinary Shares at a ratio of 1-0.6. After the reverse stock split, the Company's authorized number of Ordinary Shares was 30,000,000 shares with par value of $0.00166667 per share and 6,905,248 shares were issued and outstanding accordingly. The Company has retroactively adjusted all shares and per share data for all the periods presented. Prior to the reorganization, Powerbridge Zhuhai's equity interests were held by the former shareholders through an investment holding company, of which the Controlling Shareholders owned 84.9% of equity interest of Powerbridge Zhuhai. Powerbridge Zhuhai was incorporated on October 30, 1997 in Zhuhai, Guangdong province under the laws of the People's Republic of China (the "PRC" or "China"). Powerbridge Zhuhai is an operating subsidiary that provides global trade software application and technology services to corporate and government customers located in the PRC. Beijing Powerbridge Technology Co., Ltd. ("Powerbridge Beijing"), a company conducting engineering and IT research and development activities, was incorporated on September 28, 2017 in Beijing under the laws of PRC, with Powerbridge Zhuhai owning 55% and Mr. Tianfei Feng owning 45% of equity interest. Since inception, Powerbridge Zhuhai and Mr. Tianfei Feng have only made nominal investments in Powerbridge Beijing and no substantial business operations have occurred; as a result, Powerbridge Zhuhai and Mr. Tianfei Feng agreed to deregister the entity. Mr. Tianfei Feng later became the Company's Chief Research and Development Officer and the technology research and development activities originally conducted in Powerbridge Beijing are now conducted through the Beijing branch of Powerbridge Zhuhai. Powerbridge Beijing was deregistered on October 25, 2018. On August 7, 2018, the former shareholders transferred their 100% ownership interest in Powerbridge Zhuhai to Powerbridge HK, which is 100% owned by Powerbridge. After the reorganization, Powerbridge owns 100% equity interests of Powerbridge HK and Powerbridge Zhuhai. All shareholders have the same ownership interest in Powerbridge as in Powerbridge Zhuhai prior to the reorganization. Since the Company and its subsidiaries are effectively controlled by the same group of the shareholders before and after the reorganization, they are considered under common control. The above mentioned transactions were accounted for as a recapitalization. The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Note 2 — Summary of significant accounting policies Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission ("SEC"). Principles of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. Non-controlling interest represents the portion of the net assets of a subsidiaries attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest's operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company's consolidated financial statements include but not limited to the useful lives of property and equipment and capitalized development cost, impairment of long-lived assets, valuation of accounts receivables, revenue recognition, provision for contingent liabilities, and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates. Foreign currency translation The functional currencies of the Company are the local currency of the county in which the subsidiaries operates. The Company's financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currencies are translated at the average rates 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 currencies is translated at the historical rates of exchange at the time of capital contributions. Because cash flows are translated based on the average translation rates, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. 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 consolidated statements of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive income. Fair value measurement 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 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company's financial instruments including cash, accounts receivable, prepayments, deposits and other current assets, accounts payable, customer deposits, salaries and benefits payables, and taxes payable approximates their recorded values due to their short-term maturities. The fair value of the long term prepayments, deposits and other assets approximate their carrying amounts because the deposits were paid in cash. Cash Cash comprise cash at banks and on hand, which includes deposits with original maturities of three months or less with commercial banks in PRC. As of December 31, 2018 and 2017, cash balances were $4,348,635 and $2,958,674. The Company maintains bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs. Restricted cash Restricted cash mainly represents security deposits as required by certain customers on the Company's projects. The deposits in restricted bank accounts cannot be withdrawn until the Company completes the related projects. Restricted cash is classified as either current or non-current based on when the funds will be released in accordance with the terms of the respective agreements. As of December 31, 2018 and 2017, the restricted cash balance related to security deposits required by customers was $92,636 and $97,876, respectively. In addition, restricted cash also consists of cash equivalents of $467,806 and $109,083 used as collateral to secure short-term bank notes payable (Note 7) and bank borrowings (Note 8), respectively. 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 bank notes payable and bank borrowings are generally short term in nature due to their short maturity period of three months to one year; thus, the related restricted cash is classified as a current asset. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (230): Restricted Cash. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, and interim periods within those annual periods. Earlier adoption is permitted. The amendments in this Update should be applied using a retrospective transition method to each period presented. On January 1, 2018, the Company adopted this guidance on a retrospective basis and have applied the changes to the consolidated statement of cash flows starting from the year ended December 31, 2016. Accounts receivable, net Accounts receivable, net, is stated at the original invoiced amount net of write-offs and allowance for doubtful accounts. The Company reviews the accounts receivable on a periodic basis and makes allowances when there is doubt as to the collectability of individual balances. Past-due balances over 90 days are reviewed individually for collectability. In evaluating the collectability of individual accounts receivable balances, the Company considers several factors, including the age of the balance, the customer's payment history, current credit-worthiness, and current economic trends. Accounts receivable balances are written off after all collection efforts have been exhausted. Typically, the Company includes unbilled receivables in accounts receivable for contracts on which revenue has been recognized, but for which the customer has not yet been billed. Unbilled receivables, substantially all of which are expected to be billed within one year are stated at their estimated realizable value and consist of costs and fees billable on contract completion or the occurrence of contractual payment phase. Prepayments, deposits and other assets, net Prepayment, deposit and other assets, net, primarily consists of advances to suppliers for purchasing goods or services that have not been received or provided; security deposits made to our customers; advances to employees and loan receivables from business partners. Prepayment, deposit and other assets are classified as either current or non-current based on the terms of the respective agreements. These advances are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. Property and equipment, net Property and equipment, net, mainly comprise furniture and furniture, vehicles, computer and equipment are stated at cost less accumulated depreciation and impairment. Property and equipment are depreciated over the estimated useful lives of the assets on a straight-line basis, after considering the estimated residual value. The estimated useful lives are as follows: Useful Life Office equipment, fixtures and furniture 3-10 years Automobiles 5-8 years Capitalized development costs 5 years Computer equipment 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 the related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is charged to the statement of income Capitalized development costs The Company follows the provisions of Accounting Standards Codification ("ASC") 350-40, "Internal Use Software." ASC 350-40 provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the application are capitalized if it is determined that these upgrades or enhancements add additional functionality to the application. The capitalized development cost is amortized on a straight-line basis over the estimated useful life, which is generally five years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Impairment for long-lived assets Long-lived assets, including property, equipment, furniture and fixtures and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When these events occur, the Company measures impairment by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, the Company would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash flow amount. For the years ended December 31, 2018, 2017 and 2016, the Company recognized nil impairment for the long-lived assets. Revenue recognition The Company derives its revenues from three sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, and (3) revenue from subscription services. The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery of goods and services have occurred, the sales price is fixed or determinable, and collectability is reasonably assured. All of the Company's contracts with customer do not contain cancelable and refund-type provisions. (1) Revenue from application development service The Company's application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers' specific needs. These services also require significant production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Company is generally required to provide post-contract customer support ("PCS') for a period from three months to three years ("PCS period") after the customized application development services are delivered. The type of services for PCS clause is generally not specified in the contracts or as stand-ready services on when-and-if-available basis. Multiple Deliverable Arrangements The Company generally enters into arrangements with multiple deliverables for customized application development services contracts. If the deliverables have standalone value at contract inception, the Company accounts for each deliverable separately. The Company determines application development service, PCS or specific service, if applicable, as separated deliverables in the fixed-fee application development service contract. The Company allocates contract revenue to the identified separate units based on their relative selling prices. In accordance with ASC 605-25-30, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to the deliverables: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of the selling price ("TPE") and (iii) best estimate of the selling price ("BESP". The Company uses VSOE of selling price in the selling price allocation in all instances where it exists. VSOE of selling price for products and services is determined when a substantial majority of the selling prices fall within a reasonable range when sold separately. The Company has not established VSOE for application development service and PCS due to lack of pricing consistency and variety of different service provided. In addition, the Company's customized application differs substantially from that of competitors, it is difficult to obtain the reliable standalone competitive pricing necessary to establish TPE. Accordingly, the Company uses its BESP of application development services, hardware, consulting and technical support services and subscription services, if applicable, as the basis of revenue allocation. The Company determines BESP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the size and volume of the transactions, the geographic area where services are sold, historical standalone sales and contract prices. Revenue allocated to customized application development services is recognized as the service is performed using the percentage of completion method of accounting, under which the total value of revenue is recognized on the basis of the percentage that total cost to date bears to the total expected costs. The Company considers labor costs and related material costs for the input measurement as the best available indicator of the progress, pattern and timing in which contract obligations are fulfilled. The Company has a long history of providing these services resulting in its ability to reasonably estimate the labor costs and related material costs expected to be incurred and the progress toward completion on each fixed-price customized contract based on the proportion of labor costs and related material costs incurred to date relative to total estimated labor costs and related material costs at completion. Estimated contract costs are based on the budgeted labor costs and related material costs, which are updated based on the progress toward completion on a monthly basis. In certain application development service arrangements, the Company sells and delivers IT equipment on standalone basis prior to the delivery of the services. Since sale of equipment can be distinguished, and is separately identifiable from other promises in the contract and it is distinct within the context of the contract, the sale of equipment is considered a separate unit of accounting. Accordingly, the revenue from the related IT equipment based on its relative standalone selling price is recognized upon customer acceptance after delivery. The Company's application development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant portion of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. In instances where substantive acceptance provisions are specified in customer contracts, revenues are deferred until all acceptance criteria have been met. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. The fixed-priced application development contracts provide customers with rights to specified PCS or to unspecified PCS that is if and when available. The unspecified PCS is stand-ready service on when-and-if-available basis. It grants the customers on line and telephone access to technical support personnel during the term of the service. Specified PCS includes specified service term in the contract such as training. Revenue allocated to specified PCS or other services is recognized as the related services are rendered. Revenue allocated to unspecified PCS component is deferred and recognized on a straight-line basis over the PCS period. (2) Revenue from consulting and technical support services Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date our service is made available to customers. Revenue is recognized on a straight-line basis as earned over the terms of the respective contracts, which is typically 12 to 24 months. (3) Revenue from subscription services Revenue from subscription services is comprised of subscription fees from customers accessing the Company's software-as-a-service applications. The Company's monthly or quarterly billing to customer is on the basis of number of uses by the customers. Revenue from subscription services is recognized in the period when services are occurred. Because our customers purchase the services on a periodic basis and do not have the right to take possession of the software, we consider these arrangements to be service contracts and are not within the scope of Industry Topic 985, Software. Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. The Company reports revenues net of value added tax ("VAT"). The Company's subsidiary in PRC are subject to a 6% to 17% value added tax ("VAT") and related surcharges on the revenues earned from providing services. Deferred revenue Deferred revenue primarily consists of payments received from customers in relation to the service to be provided by the Company but for which not all of the revenue recognition criteria are met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met. Deferred revenue to be recognized in the succeeding 12 months period is included in the current deferred revenue with the remaining amounts included in noncurrent deferred revenue. Government subsidies Government subsidies mainly represent amounts granted by local government authorities as an incentive for companies to promote development of the local technology industry. The Company receives government subsidies related to government sponsored projects, and records such government subsidies as a liability when it is received. The Company records government subsidies as other income when there is no further performance obligation. Advertising expenditures Advertising expenditures are expensed as incurred and such expenses were minimal for the periods presented. Advertising expenditures have been included as part of selling and marketing expenses. Operating leases A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. All leases of the Company are currently classified as operating leases. The Company records the total expenses on a straight-line basis over the lease term. Income taxes The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. 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. An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2018, 2017 and 2016. All of the tax returns of the Company's subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing. Value added tax Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. All of the VAT returns filed by the Company's subsidiary in China, have been and remain subject to examination by the tax authorities for five years from the date of filing. Employee defined contribution plan Full time employees of the Company in the PRC participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the Company make contributions to the government for these benefits based on a certain percentage of the employee's salaries. The Company has no legal obligation for the benefits beyond the contributions. The total amount was expensed as incurred. Earnings per share The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share". ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential Ordinary Shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Comprehensive income (loss) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders' equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies. Statement of Cash Flows In accordance with ASC 230, "Statement of Cash Flows," cash flows from the Company's operations are formulated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. Commitments and Contingencies In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter. Segment reporting The Company's chief operating decision maker ("CODM") has been identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Company as a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. The Company's long-lived assets are substantially all located in the PRC and all of the Company's revenues are derived from the PRC. Therefore, no geographical segments are presented. Concentrations of Risks (a) Concentration of credit risk Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash, restricted cash, accounts receivable and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of December 31, 2018 and December 31, 2017, the aggregate amount of cash and restricted cash of $5,006,037 and $2,905,965, respectively, were held at major financial institutions in PRC, where there currently is no rule or regulation requiring the financial institutions to maintain insurance to cover bank deposits in the event of bank failure. To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in PRC. The Company conducts credit evaluations of its customers and suppliers, and generally does not require collateral or other security from them. The Company establishes an accounting policy for allowance for doubtful accounts on the individual customer's and supplier's financial condition, credit history, and the current economic conditions. (b) Foreign currency 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 which require certain supporting documentation in order to affect the remittance. The Company's functional currency is the RMB, and the Company's financial statements are presented in U.S. dollars. The RMB depreciated by 1.7% in fiscal year 2017 and further depreciated by 5.7% in fiscal year 2018. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB. To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company. (c) Significant customers For the year ended December 31, 2018, no customer accounted for more than 10% of the Company's total revenues. For the year ended December 31, 2017, two customers accounted for 17.2% and 13.1% of the Company's total revenues. For the year ended December 31, 2016, three customers accounted for 16.0%, 12.2%, and 10.0% of the Company's revenues. As of December 31, 2018, two customers accounted for 12.2% and 10.7% of the Company's accounts receivable. As of December 31, 2017, four customers accounted for 18.7%, 15.9%, 13.5%, and 10.8% of the Company's accounts receivable. (d) Significant suppliers For the year ended December 31, 2018, three suppliers accounted for 12.9%, 11.2% and 10.3% of the Company's total purchases. For the year ended December 31, 2017, two suppliers accounted for 16.6% and 12.1% of the Company's total purchases. For the years ended December 31, 2016, two suppliers accounted for 20.8% and 10.0% of the Company's total purchases. As of December 31, 2018, two suppliers accounted for 10.6% and 10.0% of the Company's total accounts payable. As of December 31, 2017, four suppliers accounted for 23.0%, 16.9%, 13.4% and 11.4% of the Company's prepayments; and one supplier accounted for 13.5% of the Company's total accounts payable. Recently issued accounting pronouncements In May 2014, August 2015, April 2016, May 2016 and December 2016, the FASB issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, ASU 2016-12 (ASC Topic 606) Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, and ASU 2016-20 (ASC Topic 606) Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, respectively. ASC Topic 606 outlines a single comprehensive model for entities to use in accounting for r |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Accounts receivable, net | Note 3 — Accounts receivable, net Accounts receivable, net, consists of the following: As of December 31 2018 2017 Accounts receivable $ 15,871,970 $ 13,107,350 Less: Allowance for doubtful accounts (392,533 ) (36,285 ) Total accounts receivable, net $ 15,479,437 $ 13,071,065 Unbilled accounts receivable included in accounts receivable above amounted to $10,929,884 and $8,533,199 as of December 31, 2018 and 2017, respectively. The unbilled accounts receivables as of December 31, 2018 are expected to be billed within one year and collected over one year. The billed accounts receivable are expected to be collected within one year. As of April 26, 2019, approximately $2.4 million (or 15.4%) of total accounts receivable as of December 31, 2018 was collected. It represented 28.9% of billed accounts receivable balance and 8.0% of unbilled accounts receivable balance as of December 31, 2018 were subsequently collected, respectively. Movement of allowance for doubtful accounts is as follows: As of December 31, 2018 2017 2016 Beginning balance $ 36,285 $ 15,083 $ 8,068 Provision for doubtful accounts 372,635 19,440 7,883 Foreign currency translation adjustments (16,387 ) 1,762 (868 ) Ending balance $ 392,533 $ 36,285 $ 15,083 |
Prepayments, Deposits and Other
Prepayments, Deposits and Other Assets, Net | 12 Months Ended |
Dec. 31, 2018 | |
Prepayments Deposits And Other Assets Net [Abstract] | |
Prepayments, deposits and other assets, net | Note 4 — Prepayments, deposits and other assets, net Prepayments, deposits and other assets, net consisted of the following: As of December 31, 2018 2017 Advances to suppliers $ 138,464 $ 310,808 Security deposits * 857,676 624,093 Advances to employees 248,191 262,682 Prepaid expense 222,862 12,772 Loan to others ** 47,997 908,453 Deferred offering cost 400,640 - Others 109,721 100,777 2,025,551 2,219,585 Less: Long term portion (865,498 ) (624,093 ) Allowance for doubtful accounts (14,047 ) (19,422 ) Prepayments, deposits and other assets – current portion $ 1,146,006 $ 1,576,070 * Security deposits represent contract fulfillment deposits required by customer for specific projects, rent deposits and etc. ** The Company had unsecured, non-interest-bearing loan receivables from various vendors. The maturity of these loans are generally within one or two years. Movement of allowance for doubtful accounts is as follows: As of December 31, 2018 2017 2016 Beginning balance $ 19,422 $ 10,648 $ - (Recovery) provision for doubtful accounts (4,510 ) 7,760 11,129 Foreign currency translation adjustments (865 ) 1,014 (481 ) Ending balance $ 14,047 $ 19,422 $ 10,648 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Note 5 — Property and equipment, net Property and equipment, net, consist of the following: As of December 31, 2018 2017 Computer equipment $ 320,406 $ 218,918 Office equipment, fixtures and furniture 2,077,831 2,053,556 Capitalized development cost 3,307,285 1,657,689 Automobiles 129,301 58,828 Subtotal 5,834,823 3,988,991 Less: accumulated depreciation and amortization (1,127,711 ) (556,422 ) Total $ 4,707,112 $ 3,432,569 Depreciation and amortization expense for the years ended December 31, 2018, 2017 and 2016 amounted to $272,458, $126,580 and $85,640, respectively. The Company capitalized development costs related to its core supporting modules of the global trade applications and solutions for internal use incurred during the application development stage. The amortization expense for the years ended December 31, 2018, 2017 and 2016 totaled $370,807, $186,974 and $48,746, respectively. The estimated amortization of capitalized development cost is as follows: Twelve months ending December 31, Estimated amortization expense 2019 $ 642,124 2020 661,457 2021 614,351 2022 477,683 2023 324,356 Total $ 2,719,971 |
Related Party Balances and Tran
Related Party Balances and Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related party balances and transactions | Note 6 — Related party balances and transactions Related party transactions and balances a. Due from related party: From time to time, the Company advances funds to Mr. Ban Lor, Chairman and CEO of the Company, for business purposes. The advance is short term in nature. The balance due from Mr. Ban Lor was $102,567 as of December 31, 2018. The advances were fully repaid in April 2019. For the year ended December 31, 2018, the Company loaned $51,516 to a related party controlled by Mr. Ban Lor’s family. The loan is due in September 2019 with annual interest rate of 5.35%. Subsequently, the loan balance was fully repaid by Mr. Ban Lor in March 2019. The Company advances funds to Mr. Stewart Lor, CFO of the Company, for business purposes. The advance is short term in nature. The balance due from Mr. Stewart Lor was $3,073 as of December 31, 2017. The advances were fully repaid in August 2018. b. Due to related party: Due to related party mainly represents the unpaid wages and other benefit to Mr. Ban Lor, Chairman and CEO of the Company. The balance due to Mr. Ban Lor was Nil and $615,481 as of December 31, 2018 and December 31, 2017, respectively, which is non-interest bearing, non-collateralized and due on demand. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
Notes payable | Note 7 — Notes payable The Company’s notes payable consisted of the following: December 31, 2018 December 31, 2017 Bank notes payable from Bank of Communication $ 467,806 $ - Certain suppliers request the Group to pay by means of bank note so as to ensure they can receive payments on time. Bank notes payable represent short-term notes payable issued by banks to the Company’s suppliers. Upon maturity of the notes, the suppliers receive the face amount of the notes from banks and the Company pays the same amount plus a bank charge of approximately 0.05% to 0.10% of the face amount to the Bank. The Company was also required to deposit of $467,806 as restricted cash to guarantee this bank notes. The bank notes payable was fully repaid upon maturity in March 2019. |
Bank Loan
Bank Loan | 12 Months Ended |
Dec. 31, 2018 | |
Bank Loan [Abstract] | |
Bank loan | Note 8 — Bank loan Outstanding balance of short-term bank loan consisted of the following: December 31, 2018 December 31, 2017 Loan from China Construction Bank $ 218,166 $ 230,507 Loan from Bank of Communication 290,888 - Loan from Bank of China 727,220 - Loan from Dongguan Bank 290,888 - $ 1,527,162 $ 230,507 The loan from China Construction Bank of $230,507 outstanding as of December 31, 2017 with annual interest rate of 6.3% was fully repaid upon maturity in January 2018. On March 2, 2018, Powerbridge Zhuhai entered into a loan agreement with China Construction Bank to obtain a loan of $218,166 for a term of one year and at a fixed annual interest rate of 7.4%. The bank loan was unsecured and guaranteed by Mr. Ban Lor, the Chairman and CEO of the Company, and his family member. The loan was fully repaid upon maturity on March 4, 2019. On October 8, 2018, Powerbridge Zhuhai entered into a loan agreement with Bank of Communication to obtain a loan of $290,888 for a term of one year and at a fixed annual interest rate of 5.4%. The bank loan was guaranteed by Mr. Ban Lor and his family. On December 7, 2018, Powerbridge Zhuhai entered into a loan agreement with Bank of China to obtain a loan of $727,220 for a term of one year and at a fixed annual interest rate of 5.2%. The bank loan was guaranteed by Mr. Ban Lor and secured by a restricted cash deposit of $109,083 as of December 31, 2018. On December 3, 2018, Powerbridge Zhuhai entered into a loan agreement with Dongguan Bank to obtain a loan of $290,888 for a term of one year and at a fixed annual interest rate of 7.0%. The bank loan was guaranteed by a third party guarantee company and Mr. Ban Lor and his family. In addition, the Company’s account receivable in the amount of $847,696 was pledged to the third party guarantee Company to support the guarantee. From January 28, 2019 to the end of April, 2019, the Company repaid $58,178 in aggregate. For the years ended December 31, 2018, 2017 and 2016, interest expense was $19,385, $13,111 and $3,665, respectively. |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Taxes | Note 9 — Taxes (a) Income tax Cayman Islands Powerbridge was incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of Cayman Islands. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. Hong Kong Powerbridge HK is established in Hong Kong. Under the Hong Kong tax laws, Powerbridge HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. PRC Powerbridge Zhuhai is governed by the Enterprise Income Tax (“EIT”) laws of PRC. Under EIT laws of PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. Powerbridge Zhuhai, the Company’s operating subsidiary in PRC, has been approved as HNTEs in 2014 and successfully renewed it in 2017, which reduced its statutory income tax rate to 15%. In 2017, Powerbridge Zhuhai obtained the PRC Software Association’s “Key Software Enterprise” status and further reduced its income tax rate to 10%. The impact of the tax holidays noted above decreased income taxes by $174,774, $655,889 and $339,036 for the fiscal year 2018, 2017 and 2016, respectively. The benefit of the tax holidays on net income per share (basic and diluted) was $0.03, $0.09 and $0.05 for the years ended December 31, 2018, 2017 and 2016, respectively. Significant components of the provision for income taxes are as follows: For the years ended December 31, 2018 2017 2016 Current 113,088 406,975 543,914 Deferred (69,898 ) 27,907 (7,527 ) Total provision for income taxes $ 43,190 $ 434,882 $ 536,387 The following table reconciles China statutory rates to the Company’s effective tax rate: For the years ended December 31, 2018 2017 2016 PRC statutory rates 25.0 % 25.0 % 25.0 % Preferential tax rates (9.9 )% (15.0 )% (10.0 )% R&D credits (12.7 )% (2.0 )% (1.8 )% Permanent difference and others 0.3 % 2.0 % 0.2 % Effective tax rate $ 2.7 % $ 10.0 % $ 13.4 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets are as follows: As of December 31, 2018 2017 Deferred tax assets: Provision for doubtful accounts $ 37,042 $ 5,571 Depreciation and amortization 50,374 15,800 Total deferred tax assets $ 87,416 $ 21,371 The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the cumulative earnings and projected future taxable income in making this assessment. Recovery of substantially all of the group’s deferred tax assets is dependent upon the generation of future income, exclusive of reversing taxable temporary differences. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets as at December 31, 2018 and 2017. (b) Value added tax Enterprises who sell goods in the PRC are subject to a value added tax in accordance with PRC laws. VAT standard rates are 6% to 17% of the gross sales price. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on sales of the finished products and services. Powerbridge Zhuhai obtained a VAT preferential status for its technology development business, accordingly, the certain Company’s technology development business is exempted from VAT. Tax savings resulted from the VAT exemption amounted to $233,345, $540,149 and $272,812 for the years ended December 31, 2018, 2017 and 2016, respectively. (c) Tax payable Taxes payable consists of the following: As of December 31, 2018 2017 Income taxes payable $ 642,215 $ 864,807 VAT and other tax payable 225,395 388,438 Totals $ 867,610 $ 1,253,245 Uncertain tax positions The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2018 and 2017, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2018 and 2017. The Company also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2018. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Equity | Note 10 — Equity Ordinary Shares Powerbridge was established under the laws of Cayman Islands on July 27, 2018. The original authorized number of Ordinary Shares was 500,000,000 share with a par value of $0.0001 per share. On August 18, 2018, in order to optimize the Company’s share capital structure, the board of directors approved a reverse stock split of the Company’s authorized number of Ordinary Shares at a ratio of 10-1. After the reverse stock split, the Company’s authorized number of Ordinary Shares became 50,000,000 shares with par value of $0.001 per share and 11,508,747 shares were issued on August 27, 2018 at par value to the original shareholders of Powerbridge Zhuhai, the equivalent to share capital of $11,509. On February 10, 2019, the board of directors further approved a reverse stock split of the Company’s authorized number of Ordinary Shares at a ratio of 1-0.6. After the reverse stock split, the Company’s authorized number of Ordinary Shares was 30,000,000 shares with par value of $0.00166667 per share and 6,905,248 shares were issued and outstanding accordingly. The Company believes it is appropriate to reflect these share issuances as nominal share issuance on a retroactive basis similar to stock split pursuant to ASC 260. The Company has retroactively adjusted all shares and per share data for all the periods presented. 2018 Stock option plan On August 18, 2018 and further amended on February 10, 2019, the Board of Directors (“Board”) approved an amended the 2018 Stock Option Plan (“Plan”). The Plan provides for discretionary grants of stock options to key employees, directors and consultants of the Company. The purpose of the Plan is to attract and retain the best available personnel and to promote the success of the Company’s business. The Board authorized that the maximum aggregate number of ordinary shares reserved and available pursuant to this Plan shall be the aggregate of (i) 1,035,787 shares, and (ii) on each January 1, starting with January 1, 2019, an additional number of shares equal to the lesser of (A) 2% of the outstanding number of ordinary shares (on a fully-diluted basis) on the immediately preceding December 31, and (B) such lower number of ordinary shares as may be determined by the Committee. The Plan shall become effective on the effective date of the Company’s contemplated initial public offering is completed, which was on April 4, 2019. The grants under the Plan generally have a maximum contractual term of ten years from the date of grant. Stock option awards granted under the plan at the determination of the Board shall be effective and exercisable after the Company’ completion of IPO of its securities. The terms of individual agreements for various grants under the Plan will be determined by the Board (or its Compensation Committee) and might contain both service and performance conditions. The Company believes the options contain an explicit service condition and a performance condition. Under ASC 718-10-55-76, if the vesting (or exercisability) of an award is based on the satisfaction of both a service and performance condition, the entity must initially determine which outcomes are probable and recognize the compensation cost over the longer of the explicit or implicit service period. Because an initial public offering generally is not considered to be probable until the initial public offering is effective, no compensation cost will be recognized until the initial public offering occurs. The Company has elected to recognize stock based compensation expense using a straight-line method for the entire employee equity awards granted with graded vesting based on service conditions provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date value of the equity awards that are vested at that date. Upon successful completion of a Qualified IPO on April 4, 2019, the Company will recognize stock based compensation for the portion of the requisite service that has been rendered as of that date for the portion for the period from August 2018 to the date of the Completion of Qualified IPO. On April 4, 2019, the Board approved to issue 1,050,500 stock options under 2018 stock option plan. Additional paid-in capital As of December 31, 2018 and 2017, additional paid-in capital in the consolidated balance sheet represented the combined contributed capital of the Company’s subsidiaries. Statutory reserve Under PRC law, the Company’s subsidiary located in the PRC (collectively referred as the (“PRC entities”) are required to provide for certain statutory reserves. The PRC entities are required to allocate at least 10% of their after tax profits on an individual company basis as determined under PRC accounting standards to the statutory reserve and has the right to discontinue allocations to the statutory reserve if such reserve has reached 50% of registered capital on an individual company basis. Powerbridge Zhuhai’s registered capital was $5,516,719 and Powerbridge Beijing’s registered capital was $1,510,620. Both Powerbridge Zhuhai and Powerbridge Beijing had accumulated deficits for the years ended December 31, 2018 and 2017, as a result, the statutory reserve balances were Nil as of December 31, 2018 and 2017. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 11 — Commitments and contingencies Contingencies From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. Lease commitment The Company has entered into non-cancellable operating lease agreements for several offices and dormitory spaces for its employees. The two leases are expiring through 2020. The Company's commitments for minimum lease payment under these operating leases as of December 31, 2018 are as follow: Twelve months ending December 31, Minimum lease payment 2019 $ 176,204 2020 58,741 2021 51,407 Total $ 286,352 Rent expense for the years ended December 31, 2018, 2017 and 2016 were $331,904, $183,998 and $171,572, respectively. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment reporting | Note 12 — Segment reporting For the years ended December 31, 2018 and 2017, the Company's CODM reviewed the financial information of the business carried out by the Company on a consolidated basis. Therefore, the Company has one operating segment, which is the provision of global trade software application and technology services. The Company operates solely in the PRC and all of the Company's long-lived assets are located in the PRC. The following table presents revenues by the service lines: For the Years Ended December 31, 2018 2017 2016 REVENUES: Application development services* $ 20,037,861 $ 19,362,813 $ 19,133,676 Consulting and technical support services 2,390,948 1,418,110 1,095,457 Subscription services 723,458 847,631 945,668 Total revenues $ 23,152,267 $ 21,628,554 $ 21,174,801 * For the year ended December 31, 2018, in some application development service arrangements, the Company sold certain IT equipment on standalone basis prior to the delivery of the services. Such revenue of $8,069,594 was included in the application development service revenue for year ended December 31, 2018. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 13 — Subsequent events On February 1, 2019, Powerbridge Zhuhai entered into a loan agreement with Bank of China to obtain a loan of $436,332 for a term of one year and at a fixed annual interest rate of 4.8%. The bank loan was guaranteed by Mr. Ban Lor and secured by a restricted cash deposit of $65,450. On April 4, 2019, the Company consummated its initial public offering (“IPO”) of 1,750,000 Ordinary Shares at a price of $5.00 per share. The gross proceeds from IPO was approximately $8.8 million. Immediately following the consummation of the IPO, there were an aggregate of 8,655,248 Ordinary Shares issued and outstanding. As a result of the IPO, the Ordinary Shares now trade on the Nasdaq Capital Market under the symbol “PBTS.” On April 17, 2019, the Company obtained a line of credit in the maximum amount of $1,454,440 from Bank of Communication for working capital purpose. The line of credit is available for the period from April 17, 2019 to April 8, 2020. The interest and payment term will be determined at each individual withdraw. On April 19, 2019, the Company withdrew $647,338 from the line of credit with interest rate of 5.04% and due on April 18, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission ("SEC"). |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. Non-controlling interest represents the portion of the net assets of a subsidiaries attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest's operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company's consolidated financial statements include but not limited to the useful lives of property and equipment and capitalized development cost, impairment of long-lived assets, valuation of accounts receivables, revenue recognition, provision for contingent liabilities, and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates. |
Foreign currency translation | Foreign currency translation The functional currencies of the Company are the local currency of the county in which the subsidiaries operates. The Company's financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currencies are translated at the average rates 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 currencies is translated at the historical rates of exchange at the time of capital contributions. Because cash flows are translated based on the average translation rates, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. 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 consolidated statements of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive income. |
Fair value measurements | Fair value measurement 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 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company's financial instruments including cash, accounts receivable, prepayments, deposits and other current assets, accounts payable, customer deposits, salaries and benefits payables, and taxes payable approximates their recorded values due to their short-term maturities. The fair value of the long term prepayments, deposits and other assets approximate their carrying amounts because the deposits were paid in cash. |
Cash | Cash Cash comprise cash at banks and on hand, which includes deposits with original maturities of three months or less with commercial banks in PRC. As of December 31, 2018 and 2017, cash balances were $4,348,635 and $2,958,674. The Company maintains bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs. |
Restricted cash | Restricted cash Restricted cash mainly represents security deposits as required by certain customers on the Company's projects. The deposits in restricted bank accounts cannot be withdrawn until the Company completes the related projects. Restricted cash is classified as either current or non-current based on when the funds will be released in accordance with the terms of the respective agreements. As of December 31, 2018 and 2017, the restricted cash balance related to security deposits required by customers was $92,636 and $97,876, respectively. In addition, restricted cash also consists of cash equivalents of $467,806 and $109,083 used as collateral to secure short-term bank notes payable (Note 7) and bank borrowings (Note 8), respectively. 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 bank notes payable and bank borrowings are generally short term in nature due to their short maturity period of three months to one year; thus, the related restricted cash is classified as a current asset. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (230): Restricted Cash. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, and interim periods within those annual periods. Earlier adoption is permitted. The amendments in this Update should be applied using a retrospective transition method to each period presented. On January 1, 2018, the Company adopted this guidance on a retrospective basis and have applied the changes to the consolidated statement of cash flows starting from the year ended December 31, 2016. |
Accounts receivable, net | Accounts receivable, net Accounts receivable, net, is stated at the original invoiced amount net of write-offs and allowance for doubtful accounts. The Company reviews the accounts receivable on a periodic basis and makes allowances when there is doubt as to the collectability of individual balances. Past-due balances over 90 days are reviewed individually for collectability. In evaluating the collectability of individual accounts receivable balances, the Company considers several factors, including the age of the balance, the customer's payment history, current credit-worthiness, and current economic trends. Accounts receivable balances are written off after all collection efforts have been exhausted. Typically, the Company includes unbilled receivables in accounts receivable for contracts on which revenue has been recognized, but for which the customer has not yet been billed. Unbilled receivables, substantially all of which are expected to be billed within one year are stated at their estimated realizable value and consist of costs and fees billable on contract completion or the occurrence of contractual payment phase. |
Prepayments, deposits and other assets | Prepayments, deposits and other assets, net Prepayment, deposit and other assets, net, primarily consists of advances to suppliers for purchasing goods or services that have not been received or provided; security deposits made to our customers; advances to employees and loan receivables from business partners. Prepayment, deposit and other assets are classified as either current or non-current based on the terms of the respective agreements. These advances are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. |
Property and equipment, net | Property and equipment, net Property and equipment, net, mainly comprise furniture and furniture, vehicles, computer and equipment are stated at cost less accumulated depreciation and impairment. Property and equipment are depreciated over the estimated useful lives of the assets on a straight-line basis, after considering the estimated residual value. The estimated useful lives are as follows: Useful Life Office equipment, fixtures and furniture 3-10 years Automobiles 5-8 years Capitalized development costs 5 years Computer equipment 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 the related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is charged to the statement of income |
Capitalized development costs | Capitalized development costs The Company follows the provisions of Accounting Standards Codification ("ASC") 350-40, "Internal Use Software." ASC 350-40 provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the application are capitalized if it is determined that these upgrades or enhancements add additional functionality to the application. The capitalized development cost is amortized on a straight-line basis over the estimated useful life, which is generally five years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. |
Impairment for long-lived assets | Impairment for long-lived assets Long-lived assets, including property, equipment, furniture and fixtures and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When these events occur, the Company measures impairment by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, the Company would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash flow amount. For the years ended December 31, 2018, 2017 and 2016, the Company recognized nil impairment for the long-lived assets. |
Revenue recognition | Revenue recognition The Company derives its revenues from three sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, and (3) revenue from subscription services. The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery of goods and services have occurred, the sales price is fixed or determinable, and collectability is reasonably assured. All of the Company's contracts with customer do not contain cancelable and refund-type provisions. (1) Revenue from application development service The Company's application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers' specific needs. These services also require significant production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Company is generally required to provide post-contract customer support ("PCS') for a period from three months to three years ("PCS period") after the customized application development services are delivered. The type of services for PCS clause is generally not specified in the contracts or as stand-ready services on when-and-if-available basis. Multiple Deliverable Arrangements The Company generally enters into arrangements with multiple deliverables for customized application development services contracts. If the deliverables have standalone value at contract inception, the Company accounts for each deliverable separately. The Company determines application development service, PCS or specific service, if applicable, as separated deliverables in the fixed-fee application development service contract. The Company allocates contract revenue to the identified separate units based on their relative selling prices. In accordance with ASC 605-25-30, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to the deliverables: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of the selling price ("TPE") and (iii) best estimate of the selling price ("BESP". The Company uses VSOE of selling price in the selling price allocation in all instances where it exists. VSOE of selling price for products and services is determined when a substantial majority of the selling prices fall within a reasonable range when sold separately. The Company has not established VSOE for application development service and PCS due to lack of pricing consistency and variety of different service provided. In addition, the Company's customized application differs substantially from that of competitors, it is difficult to obtain the reliable standalone competitive pricing necessary to establish TPE. Accordingly, the Company uses its BESP of application development services, hardware, consulting and technical support services and subscription services, if applicable, as the basis of revenue allocation. The Company determines BESP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the size and volume of the transactions, the geographic area where services are sold, historical standalone sales and contract prices. Revenue allocated to customized application development services is recognized as the service is performed using the percentage of completion method of accounting, under which the total value of revenue is recognized on the basis of the percentage that total cost to date bears to the total expected costs. The Company considers labor costs and related material costs for the input measurement as the best available indicator of the progress, pattern and timing in which contract obligations are fulfilled. The Company has a long history of providing these services resulting in its ability to reasonably estimate the labor costs and related material costs expected to be incurred and the progress toward completion on each fixed-price customized contract based on the proportion of labor costs and related material costs incurred to date relative to total estimated labor costs and related material costs at completion. Estimated contract costs are based on the budgeted labor costs and related material costs, which are updated based on the progress toward completion on a monthly basis. In certain application development service arrangements, the Company sells and delivers IT equipment on standalone basis prior to the delivery of the services. Since sale of equipment can be distinguished, and is separately identifiable from other promises in the contract and it is distinct within the context of the contract, the sale of equipment is considered a separate unit of accounting. Accordingly, the revenue from the related IT equipment based on its relative standalone selling price is recognized upon customer acceptance after delivery. The Company's application development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant portion of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. In instances where substantive acceptance provisions are specified in customer contracts, revenues are deferred until all acceptance criteria have been met. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. The fixed-priced application development contracts provide customers with rights to specified PCS or to unspecified PCS that is if and when available. The unspecified PCS is stand-ready service on when-and-if-available basis. It grants the customers on line and telephone access to technical support personnel during the term of the service. Specified PCS includes specified service term in the contract such as training. Revenue allocated to specified PCS or other services is recognized as the related services are rendered. Revenue allocated to unspecified PCS component is deferred and recognized on a straight-line basis over the PCS period. (2) Revenue from consulting and technical support services Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date our service is made available to customers. Revenue is recognized on a straight-line basis as earned over the terms of the respective contracts, which is typically 12 to 24 months. (3) Revenue from subscription services Revenue from subscription services is comprised of subscription fees from customers accessing the Company's software-as-a-service applications. The Company's monthly or quarterly billing to customer is on the basis of number of uses by the customers. Revenue from subscription services is recognized in the period when services are occurred. Because our customers purchase the services on a periodic basis and do not have the right to take possession of the software, we consider these arrangements to be service contracts and are not within the scope of Industry Topic 985, Software. Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. The Company reports revenues net of value added tax ("VAT"). The Company's subsidiary in PRC are subject to a 6% to 17% value added tax ("VAT") and related surcharges on the revenues earned from providing services. |
Deferred revenue | Deferred revenue Deferred revenue primarily consists of payments received from customers in relation to the service to be provided by the Company but for which not all of the revenue recognition criteria are met. The deferred revenue will be recognized as revenue once the criteria for revenue recognition have been met. Deferred revenue to be recognized in the succeeding 12 months period is included in the current deferred revenue with the remaining amounts included in noncurrent deferred revenue. |
Government subsidies | Government subsidies Government subsidies mainly represent amounts granted by local government authorities as an incentive for companies to promote development of the local technology industry. The Company receives government subsidies related to government sponsored projects, and records such government subsidies as a liability when it is received. The Company records government subsidies as other income when there is no further performance obligation. |
Advertising expenditures | Advertising expenditures Advertising expenditures are expensed as incurred and such expenses were minimal for the periods presented. Advertising expenditures have been included as part of selling and marketing expenses. |
Operating leases | Operating leases A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. All leases of the Company are currently classified as operating leases. The Company records the total expenses on a straight-line basis over the lease term. |
Income taxes | Income taxes The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. 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. An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2018, 2017 and 2016. All of the tax returns of the Company's subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing. |
Value added tax | Value added tax Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. All of the VAT returns filed by the Company's subsidiary in China, have been and remain subject to examination by the tax authorities for five years from the date of filing. |
Employee defined contribution plan | Employee defined contribution plan Full time employees of the Company in the PRC participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the Company make contributions to the government for these benefits based on a certain percentage of the employee's salaries. The Company has no legal obligation for the benefits beyond the contributions. The total amount was expensed as incurred. |
Earnings per share | Earnings per share The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share". ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential Ordinary Shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. |
Comprehensive income (loss) | Comprehensive income (loss) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders' equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies. |
Statement of Cash Flows | Statement of Cash Flows In accordance with ASC 230, "Statement of Cash Flows," cash flows from the Company's operations are formulated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter. |
Segment reporting | Segment reporting The Company's chief operating decision maker ("CODM") has been identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Company as a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. The Company's long-lived assets are substantially all located in the PRC and all of the Company's revenues are derived from the PRC. Therefore, no geographical segments are presented. |
Concentrations of Risks | Concentrations of Risks (a) Concentration of credit risk Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash, restricted cash, accounts receivable and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of December 31, 2018 and December 31, 2017, the aggregate amount of cash and restricted cash of $5,006,037 and $2,905,965, respectively, were held at major financial institutions in PRC, where there currently is no rule or regulation requiring the financial institutions to maintain insurance to cover bank deposits in the event of bank failure. To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in PRC. The Company conducts credit evaluations of its customers and suppliers, and generally does not require collateral or other security from them. The Company establishes an accounting policy for allowance for doubtful accounts on the individual customer's and supplier's financial condition, credit history, and the current economic conditions. (b) Foreign currency 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 which require certain supporting documentation in order to affect the remittance. The Company's functional currency is the RMB, and the Company's financial statements are presented in U.S. dollars. The RMB depreciated by 1.7% in fiscal year 2017 and further depreciated by 5.7% in fiscal year 2018. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB. To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company. (c) Significant customers For the year ended December 31, 2018, no customer accounted for more than 10% of the Company's total revenues. For the year ended December 31, 2017, two customers accounted for 17.2% and 13.1% of the Company's total revenues. For the year ended December 31, 2016, three customers accounted for 16.0%, 12.2%, and 10.0% of the Company's revenues. As of December 31, 2018, two customers accounted for 12.2% and 10.7% of the Company's accounts receivable. As of December 31, 2017, four customers accounted for 18.7%, 15.9%, 13.5%, and 10.8% of the Company's accounts receivable. (d) Significant suppliers For the year ended December 31, 2018, three suppliers accounted for 12.9%, 11.2% and 10.3% of the Company's total purchases. For the year ended December 31, 2017, two suppliers accounted for 16.6% and 12.1% of the Company's total purchases. For the years ended December 31, 2016, two suppliers accounted for 20.8% and 10.0% of the Company's total purchases. As of December 31, 2018, two suppliers accounted for 10.6% and 10.0% of the Company's total accounts payable. As of December 31, 2017, four suppliers accounted for 23.0%, 16.9%, 13.4% and 11.4% of the Company's prepayments; and one supplier accounted for 13.5% of the Company's total accounts payable. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In May 2014, August 2015, April 2016, May 2016 and December 2016, the FASB issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, ASU 2016-12 (ASC Topic 606) Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, and ASU 2016-20 (ASC Topic 606) Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, respectively. ASC Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This standard may be applied retrospectively to all prior periods presented, or retrospectively with a cumulative adjustment to retained earnings in the year of adoption ("modified retrospective transition approach"). As an "emerging growth company," or EGC, the Company has elected to take advantage of the extended transition period provided in the Securities Act Section 7(a)(2)(B) for complying with new or revised accounting standards applicable to private companies. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2018, including interim periods beginning after December 15, 2019. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASC Topic 606 on January 1, 2019 using the modified retrospective transition method and has evaluated the impact of ASC 606 and has determined that the Company's current revenue recognition policies are generally consistent with the new revenue recognition standards set forth in ASC Topic 606, therefore, the impact of the adoption is immaterial on its consolidated financial statements and disclosures. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. In January 2018, the FASB issued ASU 2018-01, Leases: Land Easement Practical Expedient for Transition. This ASU clarifies the accounting and reporting of land easements. In July 2018, the FASB issued ASU No. 2018-10, "Codification Improvements to Topic 842, Leases," ("ASU 2018-10"), to clarify how to apply certain aspects of the new lease accounting standard. The amendments in this update, among other things, better articulates the requirement for a lessee's reassessment of lease classification as of the effective date of a modification, clarifies that a change to an index or rate for variable lease payments does not constitute a resolution of a contingency that would result in the remeasurement of lease payments, and requires entities that apply Topic 842 retrospectively to each reporting period and do not adopt the practical expedients to write off any prior unamortized initial direct costs that do not meet the definition under Topic 842 to equity. The amendments in this update have the same effective date and transition requirements as the new lease standard summarized above. Also, in July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements," ("ASU 2018-11"), to provide an additional transition method. An entity can now elect not to present comparative financial information under Topic 842 if it recognizes a cumulative-effect adjustment to retained earnings upon adoption. The Company intends to make this election. The amendments in these update are effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those years, with early adoption permitted. The Company has performed an assessment of the impact of the adoption of the amendments in these updates on the Company's consolidated financial position and results of operations for the Company's leases, which primarily consist of operating leases for office space and equipment. Based on that assessment, the Company has established that the adoption of Topic 842 will result in the recognition of a significant increase to the balance sheet for right-of-use assets and lease liabilities based on the present value of future minimum lease payments. Also, the impacts from the adoption of Topic 842 to the Company's accumulated deficit and to consolidated results of operations are not expected to be material. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The amendments in ASU 2017-11 change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity's own stock. The adoption of ASU 2017-11 which will become effective for annual periods beginning after December 15, 2018 and for interim periods within those annual periods. The Company does not expect that the adoption of this guidance will have a material impact on its audited consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company's consolidated balance sheets, statements of income and comprehensive income and statements of cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment, net | Useful Life Office equipment, fixtures and furniture 3-10 years Automobiles 5-8 years Capitalized development costs 5 years Computer equipment 5 years |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivable, net | As of December 31 2018 2017 Accounts receivable $ 15,871,970 $ 13,107,350 Less: Allowance for doubtful accounts (392,533 ) (36,285 ) Total accounts receivable, net $ 15,479,437 $ 13,071,065 |
Schedule of movement of allowance for doubtful accounts | As of December 31, 2018 2017 2016 Beginning balance $ 36,285 $ 15,083 $ 8,068 Provision for doubtful accounts 372,635 19,440 7,883 Foreign currency translation adjustments (16,387 ) 1,762 (868 ) Ending balance $ 392,533 $ 36,285 $ 15,083 |
Prepayments, Deposits and Oth_2
Prepayments, Deposits and Other Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Prepayments Deposits And Other Assets Net [Abstract] | |
Schedule of prepayments, deposits and other assets, net | As of December 31, 2018 2017 Advances to suppliers $ 138,464 $ 310,808 Security deposits * 857,676 624,093 Advances to employees 248,191 262,682 Prepaid expense 222,862 12,772 Loan to others ** 47,997 908,453 Deferred offering cost 400,640 - Others 109,721 100,777 2,025,551 2,219,585 Less: Long term portion (865,498 ) (624,093 ) Allowance for doubtful accounts (14,047 ) (19,422 ) Prepayments, deposits and other assets – current portion $ 1,146,006 $ 1,576,070 * Security deposits represent contract fulfillment deposits required by customer for specific projects, rent deposits and etc. ** The Company had unsecured, non-interest-bearing loan receivables from various vendors. The maturity of these loans are generally within one or two years. |
Schedule of allowance for doubtful accounts | As of December 31, 2018 2017 2016 Beginning balance $ 19,422 $ 10,648 $ - (Recovery) provision for doubtful accounts (4,510 ) 7,760 11,129 Foreign currency translation adjustments (865 ) 1,014 (481 ) Ending balance $ 14,047 $ 19,422 $ 10,648 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | As of December 31, 2018 2017 Computer equipment $ 320,406 $ 218,918 Office equipment, fixtures and furniture 2,077,831 2,053,556 Capitalized development cost 3,307,285 1,657,689 Automobiles 129,301 58,828 Subtotal 5,834,823 3,988,991 Less: accumulated depreciation and amortization (1,127,711 ) (556,422 ) Total $ 4,707,112 $ 3,432,569 |
Schedule of estimated amortization of capitalized development cost | Twelve months ending December 31, Estimated amortization expense 2019 $ 642,124 2020 661,457 2021 614,351 2022 477,683 2023 324,356 Total $ 2,719,971 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
Schedule of notes payable | December 31, 2018 December 31, 2017 Bank notes payable from Bank of Communication $ 467,806 $ - |
Bank Loan (Tables)
Bank Loan (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Bank Loan [Abstract] | |
Schedule of short-term bank loan | December 31, 2018 December 31, 2017 Loan from China Construction Bank $ 218,166 $ 230,507 Loan from Bank of Communication 290,888 - Loan from Bank of China 727,220 - Loan from Dongguan Bank 290,888 - $ 1,527,162 $ 230,507 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision for income taxes | For the years ended December 31, 2018 2017 2016 Current 113,088 406,975 543,914 Deferred (69,898 ) 27,907 (7,527 ) Total provision for income taxes $ 43,190 $ 434,882 $ 536,387 |
Schedule of effective tax rate | For the years ended December 31, 2018 2017 2016 PRC statutory rates 25.0 % 25.0 % 25.0 % Preferential tax rates (9.9 )% (15.0 )% (10.0 )% R&D credits (12.7 )% (2.0 )% (1.8 )% Permanent difference and others 0.3 % 2.0 % 0.2 % Effective tax rate $ 2.7 % $ 10.0 % $ 13.4 % |
Schedule of deferred tax assets | As of December 31, 2018 2017 Deferred tax assets: Provision for doubtful accounts $ 37,042 $ 5,571 Depreciation and amortization 50,374 15,800 Total deferred tax assets $ 87,416 $ 21,371 |
Schedule of taxes payable | As of December 31, 2018 2017 Income taxes payable $ 642,215 $ 864,807 VAT and other tax payable 225,395 388,438 Totals $ 867,610 $ 1,253,245 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of minimum lease payment under these operating leases | Twelve months ending December 31, Minimum lease payment 2019 $ 176,204 2020 58,741 2021 51,407 Total $ 286,352 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of revenues | For the Years Ended December 31, 2018 2017 2016 REVENUES: Application development services* $ 20,037,861 $ 19,362,813 $ 19,133,676 Consulting and technical support services 2,390,948 1,418,110 1,095,457 Subscription services 723,458 847,631 945,668 Total revenues $ 23,152,267 $ 21,628,554 $ 21,174,801 * For the year ended December 31, 2018, in some application development service arrangements, the Company sold certain IT equipment on standalone basis prior to the delivery of the services. Such revenue of $8,069,594 was included in the application development service revenue for year ended December 31, 2018. |
Nature of Business and Organi_2
Nature of Business and Organization (Details) - $ / shares | Aug. 07, 2018 | Feb. 10, 2019 | Dec. 31, 2018 | Jul. 27, 2018 | Dec. 31, 2017 |
Company issued, shares | 6,905,248 | 6,905,248 | |||
Per share | $ 0.00166667 | $ 0.00166667 | |||
Authorized number of ordinary shares | 30,000,000 | 30,000,000 | |||
Outstanding shares | 6,905,248 | 6,905,248 | |||
Subsequent Event [Member] | |||||
Company issued, shares | 6,905,248 | ||||
Per share | $ 0.00166667 | ||||
Description, Reverse stock split | The board of directors approved a reverse stock split of the Company’s authorized number of Ordinary Shares at a ratio of 1-0.6. | ||||
Authorized number of ordinary shares | 30,000,000 | ||||
Outstanding shares | 6,905,248 | ||||
HK [Member] | |||||
Description, Equity interest ownership percentage | The former shareholders transferred their 100% ownership interest in Powerbridge Zhuhai to Powerbridge HK, which is 100% owned by Powerbridge. After the reorganization, Powerbridge owns 100% equity interests of Powerbridge HK and Powerbridge Zhuhai. | ||||
Percentage of ownership interest | 100.00% | ||||
Powerbridge Zhuhai [Member] | |||||
Company issued, shares | 11,508,747 | ||||
Per share | $ 0.001 | ||||
Description, Equity interest ownership percentage | Beijing Powerbridge Technology Co., Ltd. (“Powerbridge Beijing”), a company conducting engineering and IT research and development activities, was incorporated on September 28, 2017 in Beijing under the laws of PRC, with Powerbridge Zhuhai owning 55% and Mr. Tianfei Feng owning 45% of equity interest. | ||||
Percentage of ownership interest | 84.90% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Capitalized development costs [Member] | |
Estimated useful lives | 5 years |
Computer equipment [Member] | |
Estimated useful lives | 5 years |
Automobiles [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Automobiles [Member] | Maximum [Member] | |
Estimated useful lives | 8 years |
Office equipment, fixtures and furniture [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Office equipment, fixtures and furniture [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) | 12 Months Ended | ||
Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($) | Dec. 31, 2016 | |
Summary of Significant Accounting Policies (Textual) | |||
Cash balances | $ 4,348,635 | $ 2,958,674 | |
Security deposits | 92,636 | 97,876 | |
Restricted cash | $ 467,806 | ||
Deferred revenue, description | Deferred revenue to be recognized in the succeeding 12 months period is included in the current deferred revenue with the remaining amounts included in noncurrent deferred revenue. | ||
VAT rates | 17.00% | ||
Cash and restricted cash | $ 5,006,037 | 2,905,965 | |
Functional currency, description | The RMB depreciated by 1.7% in fiscal year 2017 and further depreciated by 5.7% in fiscal year 2018. | ||
Maturity period, Description | The bank notes payable and bank borrowings are generally short term in nature due to their short maturity period of three months to one year. | ||
Impairment long-lived assets. | $ 0 | $ 0 | |
Value added tax, Description | The Company’s subsidiary in PRC are subject to a 6% to 17% value added tax (“VAT”) and related surcharges on the revenues earned from providing services. | ||
Number of reportable segment | Segment | 1 | ||
Collateral Pledged [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Restricted cash | $ 109,083 | ||
Cash Equivalents [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Restricted cash | $ 467,806 | ||
Revenues [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 10.00% | ||
Revenues [Member] | Customer One [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 17.20% | 16.00% | |
Revenues [Member] | Customer Two [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 13.10% | 12.20% | |
Revenues [Member] | Customer Three [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 10.00% | ||
Accounts Receivable [Member] | Customer One [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 12.20% | 18.70% | |
Accounts Receivable [Member] | Customer Two [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 10.70% | 15.90% | |
Accounts Receivable [Member] | Customer Three [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 13.50% | ||
Accounts Receivable [Member] | Customer Four [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 10.80% | ||
Total Purchases [Member] | Suppliers One [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 12.90% | 16.60% | 20.80% |
Total Purchases [Member] | Suppliers Two [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 11.20% | 12.10% | 10.00% |
Total Purchases [Member] | Suppliers Three [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 10.30% | ||
Accounts Payable [Member] | Suppliers One [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 10.60% | 13.50% | |
Accounts Payable [Member] | Suppliers One [Member] | Prepayments [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 23.00% | ||
Accounts Payable [Member] | Suppliers Two [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 10.00% | ||
Accounts Payable [Member] | Suppliers Two [Member] | Prepayments [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 16.90% | ||
Accounts Payable [Member] | Suppliers Three [Member] | Prepayments [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 13.40% | ||
Accounts Payable [Member] | Suppliers Four [Member] | Prepayments [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentrations of risk, percentage | 11.40% | ||
Minimum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Revenue recognition ,terms | 12 months | ||
Maximum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Revenue recognition ,terms | 24 months |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Schedule of accounts receivable, net | ||
Accounts receivable | $ 15,871,970 | $ 13,107,350 |
Less: Allowance for doubtful accounts | (392,533) | (36,285) |
Total accounts receivable, net | $ 15,479,437 | $ 13,071,065 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of movement of allowance for doubtful accounts | |||
Provision for doubtful accounts | $ 368,125 | $ 27,200 | $ 19,012 |
Accounts Receivable [Member] | |||
Schedule of movement of allowance for doubtful accounts | |||
Beginning balance | 36,285 | 15,083 | 8,068 |
Provision for doubtful accounts | 372,635 | 19,440 | 7,883 |
Foreign currency translation adjustments | (16,387) | 1,762 | (868) |
Ending balance | $ 392,533 | $ 36,285 | $ 15,083 |
Accounts Receivable, Net (Det_3
Accounts Receivable, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Apr. 26, 2019 | Dec. 31, 2017 | |
Accounts Receivable, Net (Textual) | |||
Unbilled accounts receivable | $ 10,929,884 | $ 8,533,199 | |
Total accounts receivable | $ 15,479,437 | $ 13,071,065 | |
Unbilled accounts receivables, Description | The unbilled accounts receivables as of December 31, 2018 are expected to be billed within one year and collected over one year. The billed accounts receivable are expected to be collected within one year. | ||
Scenarios, Forecast [Member] | |||
Accounts Receivable, Net (Textual) | |||
Total accounts receivable | $ 2,400,000 | ||
Percentage of accounts receivable | 15.40% | ||
Percentage of billed accounts receivable | 28.90% | ||
Percentage of unbilled accounts receivable | 8.00% |
Prepayments, Deposits and Oth_3
Prepayments, Deposits and Other Assets, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Prepayments Deposits And Other Assets Net [Abstract] | |||
Advances to suppliers | $ 138,464 | $ 310,808 | |
Security deposits | [1] | 857,676 | 624,093 |
Advances to employees | 248,191 | 262,682 | |
Prepaid expense | 222,862 | 12,772 | |
Loan to others | [2] | 47,997 | 908,453 |
Deferred offering cost | 400,640 | ||
Others | 109,721 | 100,777 | |
Prepayments, deposits and other assets, net | 2,025,551 | 2,219,585 | |
Less: Long term portion | (865,498) | (624,093) | |
Allowance for doubtful accounts | (14,047) | (19,422) | |
Prepayments, deposits and other assets - current portion | $ 1,146,006 | $ 1,576,070 | |
[1] | Security deposits represent contract fulfillment deposits required by customer for specific projects, rent deposits and etc. | ||
[2] | The Company had unsecured, non-interest-bearing loan receivables from various vendors. The maturity of these loans are generally within one or two years. |
Prepayments, Deposits and Oth_4
Prepayments, Deposits and Other Assets, Net (Details 1) - Prepaid Expenses and Other Current Assets [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Beginning balance | $ 19,422 | $ 10,648 | |
(Recovery) provision for doubtful accounts | (4,510) | 7,760 | 11,129 |
Foreign currency translation adjustments | (865) | 1,014 | (481) |
Ending balance | $ 14,047 | $ 19,422 | $ 10,648 |
Prepayments, Deposits and Oth_5
Prepayments, Deposits and Other Assets, Net (Details Textual) | 12 Months Ended |
Dec. 31, 2018 | |
Prepayments, Deposits and Other Assets, Net (Textual) | |
Maturity period, Description | The bank notes payable and bank borrowings are generally short term in nature due to their short maturity period of three months to one year. |
Prepaid Expenses and Other Current Assets [Member] | |
Prepayments, Deposits and Other Assets, Net (Textual) | |
Maturity period, Description | The maturity of these loans are generally within one or two years. |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Subtotal | $ 5,834,823 | $ 3,988,991 |
Less: accumulated depreciation and amortization | (1,127,711) | (556,422) |
Total | 4,707,112 | 3,432,569 |
Computer equipment [Member] | ||
Subtotal | 320,406 | 218,918 |
Office equipment, fixtures and furniture [Member] | ||
Subtotal | 2,077,831 | 2,053,556 |
Capitalized development cost [Member] | ||
Subtotal | 3,307,285 | 1,657,689 |
Automobiles [Member] | ||
Subtotal | $ 129,301 | $ 58,828 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details 1) | Dec. 31, 2018USD ($) |
Property, Plant and Equipment [Abstract] | |
2019 | $ 642,124 |
2020 | 661,457 |
2021 | 614,351 |
2022 | 477,683 |
2023 | 324,356 |
Total | $ 2,719,971 |
Property and Equipment, Net (_3
Property and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment, Net (Textual) | |||
Depreciation and amortization expense | $ 643,265 | $ 313,554 | $ 134,350 |
Amortization expense | $ 370,807 | $ 186,974 | $ 48,746 |
Related Party Balances and Tr_2
Related Party Balances and Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Mr. Ban Lor [Member] | ||
Related Party Balances and Transaction (Textual) | ||
Balance due from related party | $ 102,567 | |
Company loaned related party controlled | $ 51,516 | |
Annual interest rate | 5.35% | |
loan due date | Sep. 30, 2019 | |
Balance due to related party | $ 615,481 | |
Advances repaid, Description | The advances were fully repaid in April 2019. | |
Mr. Stewart Lor [Member] | ||
Related Party Balances and Transaction (Textual) | ||
Balance due from related party | $ 3,073 | |
Advances repaid, Description | The advances were fully repaid in August 2018. |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes Payable [Abstract] | ||
Bank notes payable from Bank of Communication | $ 467,806 |
Notes Payable (Details Textual)
Notes Payable (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Notes Payable (Textual) | ||
Deposit of restricted cash | $ 467,806 | |
Notes Payable [Member] | ||
Notes Payable (Textual) | ||
Deposit of restricted cash | $ 467,806 | |
Maturity date | Mar. 31, 2019 | |
Minimum [Member] | ||
Notes Payable (Textual) | ||
Percentage of bank charge | 0.05% | |
Maximum [Member] | ||
Notes Payable (Textual) | ||
Percentage of bank charge | 0.10% |
Bank Loan (Details)
Bank Loan (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Bank loan | $ 1,527,162 | $ 230,507 |
Loan from China Construction Bank [Member] | ||
Bank loan | 218,166 | 230,507 |
Loan from Bank of Communication [Member] | ||
Bank loan | 290,888 | |
Loan from Bank of China [Member] | ||
Bank loan | 727,220 | |
Loan from Dongguan Bank [Member] | ||
Bank loan | $ 290,888 |
Bank Loan (Details Textual)
Bank Loan (Details Textual) - USD ($) | Dec. 07, 2018 | Dec. 03, 2018 | Oct. 08, 2018 | Mar. 02, 2018 | Apr. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Bank Loan (Textual) | ||||||||
Bank loan | $ 1,527,162 | $ 230,507 | ||||||
Restricted cash deposit | 467,806 | |||||||
Interest expense | 19,385 | 13,111 | $ 3,665 | |||||
Scenarios, Forecast [Member] | ||||||||
Bank Loan (Textual) | ||||||||
Repaid in aggregate amount | $ 58,178 | |||||||
China Construction Bank [Member] | ||||||||
Bank Loan (Textual) | ||||||||
Bank loan | $ 230,507 | |||||||
Annual interest rate | 6.30% | |||||||
Maturity date | Jan. 31, 2018 | |||||||
China Construction Bank [Member] | Powerbridge Zhuhai [Member] | ||||||||
Bank Loan (Textual) | ||||||||
Bank loan | $ 218,166 | |||||||
Annual interest rate | 7.40% | |||||||
Maturity date | Mar. 4, 2019 | |||||||
Bank of Communication [Member] | Powerbridge Zhuhai [Member] | ||||||||
Bank Loan (Textual) | ||||||||
Bank loan | $ 290,888 | |||||||
Annual interest rate | 5.40% | |||||||
Loan term | 1 year | |||||||
Bank of China [Member] | Powerbridge Zhuhai [Member] | ||||||||
Bank Loan (Textual) | ||||||||
Bank loan | $ 727,220 | |||||||
Annual interest rate | 5.20% | |||||||
Loan term | 1 year | |||||||
Restricted cash deposit | $ 109,083 | |||||||
Dongguan Bank [Member] | Powerbridge Zhuhai [Member] | ||||||||
Bank Loan (Textual) | ||||||||
Bank loan | $ 290,888 | |||||||
Annual interest rate | 7.00% | |||||||
Loan term | 1 year | |||||||
Account receivable | $ 847,696 |
Taxes (Details)
Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Current | $ 113,088 | $ 406,975 | $ 543,914 |
Deferred | (69,898) | 27,907 | (7,527) |
Total provision for income taxes | $ 43,190 | $ 434,882 | $ 536,387 |
Taxes (Details 1)
Taxes (Details 1) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
PRC statutory rates | 25.00% | 25.00% | 25.00% |
Preferential tax rates | (9.90%) | (15.00%) | (10.00%) |
R&D credits | (12.70%) | 2.00% | (1.80%) |
Permanent difference and others | 0.30% | 2.00% | 0.20% |
Effective tax rate | 2.70% | 10.00% | 13.40% |
Taxes (Details 2)
Taxes (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Provision for doubtful accounts | $ 37,042 | $ 5,571 |
Depreciation and amortization | 50,374 | 15,800 |
Total deferred tax assets | $ 87,416 | $ 21,371 |
Taxes (Details 3)
Taxes (Details 3) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Income taxes payable | $ 642,215 | $ 864,807 |
VAT and other tax payable | 225,395 | 388,438 |
Totals | $ 867,610 | $ 1,253,245 |
Taxes (Details Textual)
Taxes (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Taxes (Textual) | |||
Unified enterprise income tax rate | 25.00% | ||
Income tax rate | 15.00% | ||
Statutory income tax rate | 15.00% | ||
Reduced income tax rate | 10.00% | ||
Tax holidays decreased income taxes | $ 174,774 | $ 655,889 | $ 339,036 |
Net income per share (basic and diluted) | $ 0.03 | $ 0.09 | $ 0.05 |
Value add tax exemption amounted | $ 233,345 | $ 540,149 | $ 272,812 |
Minimum [Member] | |||
Taxes (Textual) | |||
Value add tax standard rates | 6.00% | ||
Maximum [Member] | |||
Taxes (Textual) | |||
Value add tax standard rates | 17.00% |
Equity (Details)
Equity (Details) - USD ($) | Apr. 04, 2019 | Feb. 10, 2019 | Aug. 18, 2018 | Dec. 31, 2018 | Aug. 27, 2018 | Dec. 31, 2017 |
Equity (Textual) | ||||||
Ordinary shares, authorized | 30,000,000 | 30,000,000 | ||||
Ordinary shares, par value | $ 0.00166667 | $ 0.00166667 | ||||
Ordinary, shares issued | 6,905,248 | 6,905,248 | ||||
Ordinary, shares outstanding | 6,905,248 | 6,905,248 | ||||
Minimum percentage of respective registered capital | 10.00% | |||||
Minimum percentage of after-tax profits to statutory reserve | 50.00% | |||||
Statutory reserve | $ 0 | $ 0 | ||||
Powerbridge Zhuhai's [Member] | ||||||
Equity (Textual) | ||||||
Registered capital | 5,516,719 | |||||
Powerbridge Beijing's [Member] | ||||||
Equity (Textual) | ||||||
Registered capital | 1,510,620 | |||||
Powerbridge Zhuhai and Powerbridge Beijing [Member] | ||||||
Equity (Textual) | ||||||
Statutory reserve | ||||||
2018 Stock option plan [Member] | ||||||
Equity (Textual) | ||||||
Ordinary shares reserved, description | (i) 1,035,787 shares, and (ii) on each January 1, starting with January 1, 2019, an additional number of shares equal to the lesser of (A) 2% of the outstanding number of ordinary shares (on a fully-diluted basis) on the immediately preceding December 31, and (B) such lower number of ordinary shares as may be determined by the Committee. | |||||
2018 Stock option plan [Member] | Scenarios, Forecast [Member] | ||||||
Equity (Textual) | ||||||
Stock options issued | 1,050,500 | |||||
Grants contractual term | 10 years | |||||
Subsequent Event [Member] | ||||||
Equity (Textual) | ||||||
Ordinary shares, authorized | 30,000,000 | |||||
Ordinary shares, par value | $ 0.00166667 | |||||
Description of reverse stock split | The board of directors approved a reverse stock split of the Company’s authorized number of Ordinary Shares at a ratio of 1-0.6. | |||||
Ordinary, shares issued | 6,905,248 | |||||
Ordinary, shares outstanding | 6,905,248 | |||||
Ordinary Shares [Member] | ||||||
Equity (Textual) | ||||||
Ordinary shares, authorized | 500,000,000 | 50,000,000 | ||||
Ordinary shares, par value | $ 0.0001 | $ 0.001 | ||||
Description of reverse stock split | The Company's share capital structure, the board of directors approved a reverse stock split of the Company's authorized number of Ordinary Shares at a ratio of 10-1. | |||||
Ordinary, shares issued | 11,508,747 | |||||
Ordinary Shares [Member] | Powerbridge Zhuhai's [Member] | ||||||
Equity (Textual) | ||||||
Ordinary, shares issued | 11,509 | |||||
Ordinary Shares [Member] | Subsequent Event [Member] | ||||||
Equity (Textual) | ||||||
Ordinary shares, authorized | 30,000,000 | |||||
Ordinary shares, par value | $ 0.00166667 | |||||
Ordinary, shares issued | 6,905,248 | |||||
Ordinary, shares outstanding | 6,905,248 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Dec. 31, 2018USD ($) |
Summary of minimum lease payment | |
2019 | $ 176,204 |
2020 | 58,741 |
2021 | 51,407 |
Total | $ 286,352 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies (Textual) | |||
Lease expiration period | The two leases are expiring through 2020. | ||
Rent expense | $ 331,904 | $ 183,998 | $ 171,572 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
REVENUES: | ||||
Total revenues | $ 23,152,267 | $ 21,628,554 | $ 21,174,801 | |
Application development services [Member] | ||||
REVENUES: | ||||
Total revenues | [1] | 20,037,861 | 19,362,813 | 19,133,676 |
Consulting and technical support services [Member] | ||||
REVENUES: | ||||
Total revenues | 2,390,948 | 1,418,110 | 1,095,457 | |
Subscription services [Member] | ||||
REVENUES: | ||||
Total revenues | $ 723,458 | $ 847,631 | $ 945,668 | |
[1] | For the year ended December 31, 2018, in some application development service arrangements, the Company sold certain IT equipment on standalone basis prior to the delivery of the services. Such revenue of $8,069,594 was included in the application development service revenue for year ended December 31, 2018. |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 12 Months Ended |
Dec. 31, 2018USD ($)Segment | |
Segment Reporting (Textual) | |
Number of operating segment | Segment | 1 |
Revenue of included in development service | $ | $ 8,069,594 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Feb. 01, 2019 | Apr. 17, 2019 | Apr. 04, 2019 | Dec. 31, 2018 |
Subsequent Events (Textual) | ||||
Restricted cash deposit | $ 467,806 | |||
Scenarios, Forecast [Member] | ||||
Subsequent Events (Textual) | ||||
Description of line of credit | The line of credit is available for the period from April 17, 2019 to April 8, 2020. | |||
Line of credit maximum amount | $ 1,454,440 | |||
Withdrew from line of credit | $ 647,338 | |||
Line of credit interest rate | 5.04% | |||
Line of credit due date | Apr. 18, 2020 | |||
Initial public offering ("IPO") [Member] | Scenarios, Forecast [Member] | ||||
Subsequent Events (Textual) | ||||
Ordinary shares issued | 1,750,000 | |||
Shares price | $ 5 | |||
Gross proceeds from IPO | $ 8,800,000 | |||
Aggregate ordinary shares issued and outstanding | 8,655,248 | |||
Powerbridge Zhuhai [Member] | Subsequent Event [Member] | ||||
Subsequent Events (Textual) | ||||
Loan payable | $ 436,332 | |||
Loan term | 1 year | |||
Fixed annual interest rate | 4.80% | |||
Restricted cash deposit | $ 65,450 |