Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information Line Items | |
Entity Registrant Name | Erayak Power Solution Group Inc. |
Trading Symbol | RAYA |
Document Type | 20-F |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | false |
Entity Central Index Key | 0001825875 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2022 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Ex Transition Period | false |
ICFR Auditor Attestation Flag | false |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-41568 |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | No. 528, 4th Avenue |
Entity Address, Address Line Two | Binhai Industrial Park |
Entity Address, City or Town | Wenzhou |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 325025 |
City Area Code | +86 |
Title of 12(b) Security | Class A ordinary shares, par value $0.0001 per share |
Security Exchange Name | NASDAQ |
Entity Interactive Data Current | Yes |
Document Accounting Standard | U.S. GAAP |
Auditor Firm ID | 6706 |
Auditor Name | TPS Thayer, LLC |
Auditor Location | Sugar Land, TX |
Business Contact | |
Document Information Line Items | |
Entity Address, Address Line One | No. 528, 4th Avenue |
Entity Address, Address Line Two | Binhai Industrial Park |
Entity Address, City or Town | Wenzhou |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 325025 |
City Area Code | +86 |
Local Phone Number | 0571-82651956 |
Contact Personnel Name | Lingyi Kong |
Class A Ordinary Shares | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 11,450,000 |
Class B Ordinary Shares | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 1,000,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 7,032,519 | $ 5,174,693 |
Restricted cash | 34,728 | |
Accounts receivable, net | 9,961,343 | 1,753,880 |
Inventories | 6,227,456 | 3,902,067 |
Advances to suppliers and other | 4,716,491 | 2,112,852 |
Prepaid expenses | 495,319 | |
Loan receivable | 168,184 | |
Other receivables | 95,007 | 55,246 |
Total current assets | 28,235,728 | 13,494,057 |
Property, plant and equipment, net | 1,662,155 | 1,079,983 |
Intangible assets, net | 8,814 | 11,093 |
Right-of-use assets, net | 7,665,013 | 8,849,073 |
Deferred tax assets | 33,490 | 36,247 |
TOTAL ASSETS | 37,605,200 | 23,470,453 |
Current liabilities: | ||
Accounts payable | 4,729,174 | 4,151,749 |
Accrued expenses and other current liabilities | 790,608 | 626,454 |
Advances from customers | 711,013 | 542,010 |
Due to related parties | 391,151 | 158,198 |
Short-term borrowings | 6,227,165 | 5,756,146 |
Long-term loans – current portion | 4,349,591 | |
Tax payable | 844,925 | 633,919 |
Total current liabilities | 18,043,626 | 11,868,476 |
Long-term loans | 217,523 | 4,707,655 |
Government loan | ||
TOTAL LIABILITIES | 18,261,149 | 16,576,131 |
COMMITMENTS AND CONTINGENCIES | ||
Shareholders’ Equity: | ||
Class A shares, 450,000,000 shares authorized; 11,000,000 shares issued and outstanding as of December 31, 2022; 8,000,000 shares issued and outstanding as of December 31, 2021 | 1,100 | 800 |
Class B shares, 50,000,000 shares authorized; 1,000,000 shares issued and outstanding as of December 31, 2022 and 2021 | 100 | 100 |
Additional paid-in capital | 10,645,122 | 1,060,510 |
Statutory reserve | 916,912 | 568,418 |
Retained earnings | 8,164,759 | 5,037,292 |
Accumulated other comprehensive (loss) income | (383,942) | 227,202 |
Total Shareholders’ equity | 19,344,051 | 6,894,322 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 37,605,200 | $ 23,470,453 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - shares | Dec. 31, 2022 | Dec. 31, 2021 |
Class A Ordinary Shares | ||
Ordinary shares authorized | 450,000,000 | 450,000,000 |
Ordinary shares issued | 11,000,000 | 8,000,000 |
Ordinary shares outstanding | 11,000,000 | 8,000,000 |
Class B Ordinary Shares | ||
Ordinary shares authorized | 50,000,000 | 50,000,000 |
Ordinary shares issued | 1,000,000 | 1,000,000 |
Ordinary shares outstanding | 1,000,000 | 1,000,000 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Sales | $ 26,909,025 | $ 18,628,886 | $ 14,121,838 |
Cost of sales | (20,290,231) | (12,909,462) | (10,322,982) |
Gross profit | 6,618,794 | 5,719,424 | 3,798,856 |
Operating expenses: | |||
General and administrative | (929,500) | (690,619) | (544,629) |
Selling and marketing | (720,120) | (506,305) | (325,309) |
Research and development | (932,268) | (986,885) | (605,115) |
Bad debt expense | (2,649) | (15,112) | |
Inventory reserve reversal/(provision) | 31,668 | (47,358) | |
Total operating expenses | (2,550,220) | (2,233,816) | (1,490,165) |
Operating income | 4,068,574 | 3,485,608 | 2,308,691 |
Other income (expenses): | |||
Interest expenses, net | (473,088) | (417,648) | (245,963) |
Rental income, net | 98,716 | 116,193 | 322,420 |
Other income, net | 219,530 | 512,412 | 213,965 |
Total other income (expenses), net | (154,842) | 210,957 | 290,422 |
Income before income taxes | 3,913,732 | 3,696,565 | 2,599,113 |
Income tax provision | (437,771) | (301,916) | (385,741) |
Net income | 3,475,961 | 3,394,649 | 2,213,372 |
Other comprehensive income: | |||
Foreign currency translation adjustment | (611,144) | 122,397 | 193,531 |
Total comprehensive income | $ 2,864,817 | $ 3,517,046 | $ 2,406,903 |
Earnings per share attributable to common shareholders: | |||
Shares (in Shares) | 12,000,000 | 9,000,000 | 10,000 |
Earnings per share (in Dollars per share) | $ 0.38 | $ 2.4 | $ 221.34 |
Weighted average number of shares outstanding | |||
Weighted average number of shares outstanding, Basic (in Shares) | 9,147,945 | 1,413,918 | 10,000 |
Consolidated Statements of In_2
Consolidated Statements of Income and Comprehensive Income (Parentheticals) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Weighted average number of shares outstanding, Diluted | 9,147,945 | 1,413,918 | 10,000 |
Consolidated Statements Of Chan
Consolidated Statements Of Changes In Shareholders’ Equity - USD ($) | Class A shares Ordinary shares | Class B shares Ordinary shares | Additional Paid-in Capital | Statutory Reserve | Retained Earnings | Accumulated Other Comprehensive Income (loss) | Total |
Balance at Dec. 31, 2019 | $ 1 | $ 1,060,510 | $ 6,860 | $ (9,171) | $ (88,726) | $ 969,474 | |
Balance (in Shares) at Dec. 31, 2019 | 10,000 | ||||||
Foreign currency translation loss | 193,531 | 193,531 | |||||
Net income | 2,213,372 | 2,213,372 | |||||
Statutory reserve | 215,221 | (215,221) | |||||
Balance at Dec. 31, 2020 | $ 1 | 1,060,510 | 222,081 | 1,988,980 | 104,805 | 3,376,377 | |
Balance (in Shares) at Dec. 31, 2020 | 10,000 | ||||||
Share issuance | $ 800 | $ 99 | 899 | ||||
Share issuance (in Shares) | 8,000,000 | 990,000 | |||||
Share conversion | $ (1) | $ 1 | |||||
Share conversion (in Shares) | (10,000) | 10,000 | |||||
Foreign currency translation loss | 122,397 | 122,397 | |||||
Net income | 3,394,649 | 3,394,649 | |||||
Statutory reserve | 346,337 | (346,337) | |||||
Balance at Dec. 31, 2021 | $ 800 | $ 100 | 1,060,510 | 568,418 | 5,037,292 | 227,202 | 6,894,322 |
Balance (in Shares) at Dec. 31, 2021 | 8,000,000 | 1,000,000 | |||||
Share issuance | $ 300 | 9,584,612 | 9,584,912 | ||||
Share issuance (in Shares) | 3,000,000 | ||||||
Foreign currency translation loss | (611,144) | (611,144) | |||||
Net income | 3,475,961 | 3,475,961 | |||||
Statutory reserve | 348,494 | (348,494) | |||||
Balance at Dec. 31, 2022 | $ 1,100 | $ 100 | $ 10,645,122 | $ 916,912 | $ 8,164,759 | $ (383,942) | $ 19,344,051 |
Balance (in Shares) at Dec. 31, 2022 | 11,000,000 | 1,000,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Cash Flows [Abstract] | |||
Net income | $ 3,475,961 | $ 3,394,649 | $ 2,213,372 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Depreciation and amortization | 269,817 | 215,121 | 148,194 |
Deferred tax assets | (30,633) | (648) | |
Bad debt expense | 2,649 | 15,112 | |
Inventory reserve (reversal)/provision | (31,668) | 47,358 | |
Deferred expenses | 30,744 | ||
Imputed interest expenses | 27,121 | 70,195 | 56,987 |
Right of use lease assets amortization | 523,774 | 546,362 | 188,879 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (8,549,354) | 3,380,552 | (4,078,270) |
Inventories | (2,656,056) | (2,200,180) | (329,435) |
Advances to suppliers | 1,227,244 | (1,109,383) | (730,042) |
Prepaid expenses | 469,085 | (489,315) | |
Other receivables | (41,239) | 127,332 | (96,160) |
Loan receivable | (172,388) | ||
Accounts payable | 661,080 | 803,611 | 274,724 |
Accrued expenses and other current liabilities | 164,303 | 356,061 | (90,921) |
Advances from customers | 215,483 | (276,454) | 338,968 |
Lease liability | (6,437,325) | ||
Tax payable | 265,702 | (195,033) | 569,330 |
Net cash (used in) provided by operating activities | (4,151,135) | 4,642,892 | (7,926,491) |
Cash Flows from Investing Activities: | |||
Purchases of property, plant and equipment | (694,813) | (244,017) | (176,649) |
Purchases of intangible assets | (155) | (9,357) | |
Advance for potential land purchase | (4,201,354) | ||
Net cash used in investing activities | (4,896,167) | (244,172) | (186,006) |
Cash Flows from Financing Activities: | |||
Proceeds from short-term borrowings | 8,381,681 | 4,284,208 | 3,692,217 |
Repayments on short-term borrowings | (7,450,134) | (4,182,881) | (799,373) |
Proceeds from related parties | 24,015,431 | 15,311,425 | 6,882,563 |
Repayments to related parties | (23,930,302) | (16,172,950) | (5,651,853) |
Proceeds from IPO | 10,080,231 | ||
Proceeds (repayment) of notes payable | (7,285,918) | 6,807,451 | |
Proceeds from long-term loan | 1,235,004 | 4,650,586 | |
Repayments on long-term loan | (1,012,044) | ||
Net cash provided by (used in) financing activities | 11,319,867 | (3,395,530) | 10,931,005 |
Effect of exchange rate changes on cash | (381,011) | 109,448 | 231,547 |
Net increase in cash and cash equivalents | 1,892,554 | 1,003,190 | 2,818,508 |
Cash and cash equivalents at the beginning of year | 5,174,693 | 4,062,055 | 1,012,000 |
Cash and cash equivalents at the end of year | 7,067,247 | 5,174,693 | 4,062,055 |
Cash and cash equivalents | 7,032,519 | 5,174,693 | 460,522 |
Restricted cash | 34,728 | 3,601,533 | |
Cash and cash equivalents at the end of year | 7,067,247 | 5,174,693 | 4,062,055 |
Supplemental disclosures of cash flows information: | |||
Cash paid for income taxes | 123,608 | 99,690 | 26,669 |
Cash paid for interest | 831,755 | 365,752 | 94,631 |
Supplemental disclosures of non-cash information: | |||
Deferred IPO cost netted against IPO proceeds in equity | $ 495,319 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS Erayak Power Solution Group Inc. (“Erayak Group”) Erayak Group was incorporated on June 14, 2019 under the laws of Cayman Islands. Under its memorandum of association, Erayak Group is authorized to issue 500,000,000 ordinary shares of par value of $0.0001 each, comprising of: (i) 450,000,000 Class A Ordinary Shares of par value of USD0.0001 each, and (ii) 50,000,000 Class B Ordinary Shares of par value of USD0.0001 each. There are currently 11,000,000 issued and outstanding Class A Ordinary Shares and 1,000,000 issued and outstanding Class B Ordinary Shares, of which 6,000,000 Class A and 1,000,000 Class B Ordinary Shares are owned by Erayak International Limited, 1,400,000 Class A Ordinary Shares are owned by CEC Science and Innovation Co., Ltd., and 600,000 Class A Ordinary Shares are owned by Grand Merchant Incorporation Limited. Erayak Group is a holding company and is currently not actively engaging in any business. Erayak Group’s registered agent is Harneys Fiduciary (Cayman) Limited, and its registered office is at 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman, KY1-1002, Cayman Islands. Entity Name Registered Location Date of Incorporation Ownership as of the issuance date of the report Erayak Power Solution Group Inc. (“Erayak Group”) Cayman Islands June 14, 2019 Parent Erayak Power Solution Limited British Virgin Island June 17, 2019 100% by the Parent Erayak Power Solution Hong Kong Limited (“Erayak HK”) Hong Kong June 26, 2019 100% by Erayak BVI Wenzhou Wenjie Technology Limited (“Wenjie”) Wenzhou, China December 11, 2019 100% by Erayak HK Beijing Leiya Meijia Technology Co., Ltd. (“Meijia”) Beijing, China May 14, 2019 100% by Wenjie Zhejiang Leiya Electronics Limited (“Leiya”) Wenzhou, China March 5, 2009 100% by Wenjie Wenzhou New Focus Limited Wenzhou, China November 21, 2012 100% by Leiya Erayak Power Solution Limited (“Erayak BVI”) Erayak BVI was incorporated on June 17, 2019 under the laws of British Virgin Islands. Under its memorandum of association, Erayak BVI is authorized to issue 50,000 ordinary shares of a single class, par value $1 per ordinary share. There are currently 100 issued and outstanding ordinary shares, of which 100% are owned by Erayak Power Solution Group Limited. Erayak BVI is a holding company and is currently not actively engaging in any business. Erayak BVI’s registered agent is Harneys Corporate Services Limited and its registered office is at Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands. Erayak Power Solution Hong Kong Limited (“Erayak HK”) Erayak HK was incorporated on June 26, 2019 under the laws of Hong Kong and is a wholly owned subsidiary of Erayak Power Solution Limited. The paid in capital was zero as of December 31, 2022. Erayak HK did not have any operations as of December 31, 2022. Wenzhou Wenjie Technology Limited (“Wenjie”) Wenjie was incorporated on December 11, 2019 in People’s Republic of China (“China” or “PRC”), and is a wholly owned subsidiary of Erayak Power Solution Hong Kong Limited. Wenjie is a wholly-foreign owned enterprise organized under the laws of the PRC. The registered capital is RMB 5,000,000 and the paid in capital was zero as of December 31, 2022. Wenjie did not have any operations as of December 31, 2022. Beijing Leiya Meijia Technology Co., Limited (“Meijia”) Meijia was incorporated on May 14, 2019 under the laws of the People’s Republic of China. The registered capital is RMB 100,000, and the paid in capital was zero as of December 31, 2022. Meijia was acquired by Wenjie on January 12, 2021 and did not have any operations as of December 31, 2022. Zhejiang Leiya Electronics Limited (“Leiya”) Leiya was incorporated on March 5, 2009 under the laws of the People’s Republic of China. The registered capital is RMB 50,000,000, and the paid in capital is RMB 6,900,000 as of December 31, 2022. The registered principal activities of Leiya are mainly development, production and sales of inverters, chargers and gasoline generators. Wenzhou New Focus Limited (“New Focus”) New Focus was incorporated on November 21, 2012 in China, and is a wholly owned subsidiary of Leiya. The registered capital is RMB 30,000,000. The paid in capital was RMB 5,000,000 as of December 31, 2022. The principal activity of New Focus is mainly the sale of Leiya’s products, which involves exports to multiple countries. Reorganization In or about April and August 2020, the Company completed corporate reorganization to roll several controlled entities (now referred to as the subsidiaries) into one legal corporation (the Company). Shengling Xiang transferred 10% equity of Leiya to Hecang Limited, a Hong Kong entity’s subsidiary, on January 14, 2020. On April 21, 2020, Wenjie acquired 90% equity of Leiya from Shengling Xiang, and 10% from Hecang Limited. As a result, Leiya’s equity interest is 100% held by Wenjie as of April 21, 2020. On August 12, 2020, Chuanlong Lin transferred 100% equity of New Focus to Leiya. Therefore, Leiya holds 100% of equity interest of New Focus as of August 12, 2020. Shengling Xiang, Hecang Limited, and Chuanlong Lin were holding shares on behalf of Lingyi Kong, and therefore, the Company is under the control of Lingyi Kong both before and after the transactions. During the years presented in these consolidated financial statements, the control of the entities has never changed (always under the ultimate control of Lingyi Kong). Accordingly, the combination has been treated as a corporate restructuring (reorganization) of entities under common control and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control. 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 accompanying consolidated financial statements. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles in the United Stated of America (“US GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of the Company and its majority-owned and controlled subsidiaries. All significant inter-company transactions and balances have been eliminated upon consolidation. Going Concern Consideration As of December 31, 2022, the Company had a negative cash flow from operating activities of $4,151,135. The Company meets its day-to-day working capital requirements through its bank facilities. Most of the bank borrowings as of December 31, 2022, that are repayable within the next 12 months, are subject to renewal, and the management is confident that these borrowings can be renewed upon expiration based on the Company’s past experience and credit history. In addition, the Company had a positive working capital of $10,192,102 as of December 31, 2022. In order to strengthen the Company’s liquidity in the foreseeable future, the Company has taken the following measures: (i) Negotiating with banks in advance for renewal and obtaining new banking facilities; (ii) Taking various cost control measures to tighten the costs of operations; and (iii) Implementing various strategies to enhance sales and profitability. The management has a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, and therefore the going concern consideration raised from the negative cash flow from operating activities is not an issue. Use of Estimates The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Such estimates include, but are not limited to, allowances for doubtful accounts, inventory valuation, useful lives of property, plant and equipment, intangible assets, and income taxes related to realization of deferred tax assets and uncertain tax position. Actual results could differ from those estimates. Foreign Currency Translation The financial records of the Company’s subsidiaries in People’s Republic of China (“PRC”) are maintained in their local currencies which are Chinese Yuan (“CNY” or “RMB”). Monetary assets and liabilities denominated in currencies other than their local currencies are translated into local currencies at the rates of exchange in effect at the consolidated balance sheet dates. Transactions denominated in currencies other than their local currencies during the year are converted into local currencies at the applicable rates of exchange prevailing when the transactions occur. Transaction gains and losses are recorded in other income/(expense), net in the consolidated statements of income and comprehensive income. The Company maintained its financial record using the United States dollar (“US dollar”) as the functional currency, while the subsidiaries of the Company in Hong Kong and mainland China maintained their financial records using RMB as the functional currencies. The reporting currency of the Company is US dollar. When translating local financial reports of the Company’s subsidiaries into US dollar, assets and liabilities are translated at the exchange rates at the consolidated balance sheet date, equity accounts are translated at historical exchange rates and revenue, expenses, gains and losses are translated at the average rate for the period. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income in the consolidated statements of income and comprehensive income. The relevant exchange rates are listed below: For the Years Ended December 31 2022 2021 2020 Period Ended RMB: USD exchange rate 6.8972 6.3726 6.5250 Period Average RMB: USD exchange rate 6.7290 6.4508 6.9042 Cash and Cash Equivalents Cash and cash equivalents primarily consist of cash and deposits with financial institutions which are unrestricted as to withdrawal and use. Cash equivalents consist of highly liquid investments that are readily convertible to cash generally with original maturities of three months or less when purchased. Restricted Cash The Company had bank acceptance notes outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. Those notes are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. As of December 31, 2022, and 2021, restricted cash was $34,728 and $0 Accounts Receivable and Allowance for Doubtful Accounts Accounts receivables are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. The Company records adjustments to inventory for excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value. These adjustments are based upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory. Advances to Suppliers Advances to suppliers refer to advances for purchase of materials or other service agreements, which are applied against accounts payable when the materials or services are received. The Company reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would write off such amount in the period when it is considered impaired. For the years ended December 31, 2022, 2021 and 2020, the Company had no write-offs for advances to suppliers. Advances from Customers Advances from customers refer to advances received from customers regarding product sales, which are applied against accounts receivable when products are sold. Property, Plant and Equipment, net Property, plant, and equipment are recorded at cost less accumulated depreciation. Depreciation commences upon placing the asset in use and is recognized on a straight-line basis over the estimated useful lives of the assets with 5% of residual value, as follows: Useful lives Buildings 10-20 years Machinery and equipment 5-20 years Transportation vehicles 3-10 years Office equipment 3-10 years Electronic equipment 3-10 years Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. Intangible Assets Intangible assets consist of patents and a trademark. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Useful lives Patents 10 years Trademark 10 years Leases/Right of use assets Effective January 1, 2018, the Company adopted the new lease accounting standard using a modified retrospective transition method which allowed the Company not to recast comparative periods presented in its consolidated financial statements. In addition, the Company elected the package of practical expedients, which allowed the Company to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company combines the lease and non-lease components in determining the ROU assets and related lease obligation. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities as disclosed in financial statements. ROU assets and related lease obligations are recognized at commencement date based on the present value of remaining lease payments over the lease term. Impairment of Long-lived Assets The Company’s management reviews the carrying values of long-lived assets whenever events and circumstances, such as a significant decline in the asset’s market value, obsolescence or physical damage affecting the asset, significant adverse changes in the assets use, deterioration in the expected level of the assets performance, cash flows for maintaining the asset are higher than forecast, indicate that the net book value of an asset may not be recovered through expected future cash flows from its use and eventual disposition. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There was no impairment charge recognized for long-lived assets for the years ended December 31, 2022, 2021 and 2020. Fair Value Measurement Fair Value Measurements and Disclosures requires disclosure of the fair value of financial instruments held by the Company. 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 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 prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. For the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, other current liabilities, notes payable, bank loans, and other receivables, the carrying amounts approximate their fair values due to their short maturities as of December 31, 2022, 2021 and 2020. Value-added Tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. All of the Company’s products that are sold in the PRC are subject to a VAT on the gross sales price. The Company is subject to a VAT rate of 17% before May 1, 2018, 16% on and after May 1, 2018, and a new VAT rate of 13% effective on April 1, 2019. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. Revenue Recognition The Company generates its revenues mainly from sales of electrical products, such as electrical converters and inverters, to third-party customers, who are mainly distributors and retailers. The Company follows Financial Accounting Standards Board (FASB) ASC 606 and accounting standards updates (“ASU”) 2014-09 for revenue recognition. On January 1, 2018, the Company has early adopted ASU 2014-09, which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In the principal versus agent consideration, since no another party is involved in transactions, the Company is a principal. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company analyzed historical refund claims for defective products and concluded that they have been immaterial. Revenues are reported net of all value added taxes. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied at a point in time), which typically occurs at delivery. For international sales, the Company sells its products primarily under the free onboard (“FOB”) shipping point term. For sales under the FOB shipping point term, the Company recognizes revenues when products are delivered from Company to the designated shipping point. Prices are determined based on negotiations with the Company’s customers and are not subject to adjustment. Rental income Rental income from the subleases of part of the leased assets under operating leases is recognized in the statements of comprehensive income on a straight-line basis over the term of the lease. Government Grant Government grants are the compensation for expenses already incurred or for the purpose of giving immediate financial support to the Company. The government evaluates the Company’s eligibility for the grants on a consistent basis, and then makes the payment. Therefore, there are no restrictions on the grants. Government grants are recognized when received and all the conditions for their receipt have been met. The grants received were $194,001, $169,827, and $220,245 for the years ended December 31, 2022, 2021 and 2020, respectively, which were included in other income on Consolidated Statement of Income and Comprehensive Income. Research and Development Costs Research and development activities are directed toward the development of new products as well as improvements in existing processes. These costs, which primarily include salaries, contract services and supplies, are expensed as incurred. Shipping and Handling Costs Shipping and handling costs are expensed when incurred and are included in selling and marketing expense. Shipping and handling costs were $181,556, $78,281, and $24,231 for the years ended December 31, 2022, 2021 and 2020, respectively. Advertising Costs Advertising costs are expensed as incurred in accordance with ASC 720-35, “Other Expenses-Advertising Costs”. Advertising costs were $8,513, $5,873, and $11,724 for years ended December 31, 2022, 2021 and 2020, respectively. Income Taxes The Company accounts for income taxes using the asset and liability method whereby it calculates deferred tax assets or liabilities for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, net operating loss carry forwards and credits by applying enacted tax rates applicable to the years in which those temporary differences are expected to be reversed or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The components of the deferred tax assets and liabilities are individually classified as non-current amounts. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. To the extent applicable, the Company records interest and penalties as other expense. All of the tax returns of the Company’s PRC subsidiaries remain subject to examination by PRC tax authorities for five years from the date of filing. The fiscal year for tax purpose in PRC is December 31. In the case of tax evasion, which is not clearly defined in the law, there is no limitation on the tax years open for investigation. Accordingly, the PRC entities' tax years from 2018 to 2022 remain subject to examination by the tax authorities. There were no ongoing examinations by tax authorities as of December 31, 2022 and 2021. The Company and its subsidiaries are not subject to U.S. tax laws and local state tax laws. The Company’s income and that of its related entities must be computed in accordance with Chinese and foreign tax laws, as applicable, and all of which may be changed in a manner that could adversely affect the amount of distributions to shareholders. There can be no assurance that Income Tax Laws of PRC will not be changed in a manner that adversely affects shareholders. In particular, any such change could increase the amount of tax payable by the Company, reducing the amount available to pay dividends to the holders of the Company’s ordinary shares. Earnings Per Share Earnings (loss) per share is calculated in accordance with ASC 260 Earnings per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is computed in accordance with the treasury stock method and based on the weighted average number of ordinary shares and dilutive ordinary share equivalents. Dilutive ordinary share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive. There were no dilutive ordinary share equivalents outstanding during the years ended December 31, 2022, 2021 and 2020. The Company did not use the two-class method to compute net income per ordinary share, because it did not have other issued securities other than ordinary shares. Class A and Class B shares are both ordinary shares, and per Article 6 in Memorandum and Articles of Association (amended and restated), they have the same rights, preferences, privileges, and restrictions, except for voting and conversion rights. Comprehensive income/(loss) Comprehensive income/(loss) is defined as the changes in shareholders’ equity during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive income or loss is reported in the consolidated statements of comprehensive income/(loss). Accumulated other comprehensive income/(loss), as presented on the accompanying consolidated balance sheets, consists of accumulated foreign currency translation adjustments. Certain Risks and Concentration Exchange Rate Risks The Company operates in PRC, which may give rise to significant foreign currency risks mainly from fluctuations and the degree of volatility of foreign exchange rates between the USD and the RMB. Currency Convertibility Risks Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, notes receivable. The Company places its cash and cash equivalents, restricted cash, and note receivable in good credit quality financial institutions in Hong Kong and PRC. Concentration of credit risks with respect to accounts receivables is linked to the concentration of revenue. To manage credit risk, the Company performs ongoing credit evaluations of customers’ financial condition. Interest Rate Risks The Company is subject to interest rate risk. The Company has bank interest bearing loans charged at variable interest rates. And although some bank interest bearing loans are charged at fixed interest rates within the reporting period, the Company is still subject to the risk of adverse changes in the interest rates charged by the banks when these loans are refinanced. Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note1, this may not be indicative of future results. Liquidity Risks Our primary sources of liquidity consist of existing cash balances, cash flows from our operating activities and availability under our revolving credit facility. Our ability to generate sufficient cash flows from our operating activities is primarily dependent on our sales of converters and power generating products to our customers at margins sufficient to cover fixed and variable expenses. As of December 31, 2022, and 2021, we had cash and cash equivalents of $7,067,247 and $5,174,693, respectively. We believe that our current cash, cash to be generated from our operations and access to loans from our related parties will be sufficient to meet our working capital needs for at least the next twelve months. Although we do not have any amounts committed to be provided by our related parties, due to their relatively small amounts, we do not believe our working capital needs will be negatively impacted without such funds provided by related parties. We are also not dependent upon this offering to meet our liquidity needs for the next twelve months. However, we plan to expand our business to implement our growth strategies in our existing market and strengthen our position in the marketplace. To do so, we will need more capital through equity financing to increase our production and meet market demands. Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASU”). Management periodically reviews new accounting standards that are issued. Recently Issued Accounting Standards In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326). The amendments in this update are related to the following two issues: - Issue 1: Troubled Debt Restructurings (“TDRs”) by Creditors The amendments in this Update eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan. - Issue 2: Vintage Disclosures—Gross Writeoffs For public business entities, the amendments in this Update require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. For entities that have adopted the amendments in Update 2016-13, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For entities that have not yet adopted the amendments in Update 2016-13, the effective dates for the amendments in this Update are the same as the effective dates in Update 2016-13. The Company does not expect the adoption to have a material impact on its consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not expected to have a material effect on the Company’s financial position, result of operations or cash flows. Reclassification of Prior Year Presentation Prior periods have been reclassified to conform to the current period presentation. The reclassification had no impact on the Consolidated Balance Sheet and Consolidated Statement of Income and Comprehensive Income or Consolidated Statement of Cash Flows. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3 – ACCOUNTS RECEIVABLE, NET Accounts receivable as of December 31, 2022 and 2021 consisted of the following: 2022 2021 Accounts receivable $ 9,963,821 $ 1,756,562 Less: allowance for doubtful accounts (2,478 ) (2,682 ) Accounts receivable, net $ 9,961,343 $ 1,753,880 The average accounts receivable turnover period was approximately 79 days and 66 days for the fiscal years ended December 31, 2022 and 2021, respectively. Changes of allowance for doubtful accounts for the years ended December 31, 2022 and 2021 were as follow: 2022 2021 Beginning balance $ (2,682 ) $ - Additional reserve through bad debt expense - (2,649 ) Bad debt write-off - - Exchange difference 204 (33 ) Ending balance $ (2,478 ) $ (2,682 ) The bad debt expense recorded by the Company during the years ended December 31, 2022, 2021 and 2020 was $0, $2,682 and $0, respectively. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2022 | |
Inventories [Abstract] | |
INVENTORIES | NOTE 4 – INVENTORIES Inventories as of December 31, 2022 and 2021 consisted of the following: 2022 2021 Raw materials $ 4,298,235 $ 2,173,972 Work in process 642,235 827,996 Finished goods 1,300,383 948,038 Inventory valuation allowance (13,397 ) (47,939 ) Total $ 6,227,456 $ 3,902,067 The inventory valuation allowance reversed for the fiscal year ended December 31, 2022 was $31,668. The inventory valuation allowance recognized for the fiscal year ended December 31, 2021 was $47,358. There were no write-offs for the fiscal years ended December 31, 2022, 2021 and 2020. |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
PREPAID EXPENSES | NOTE 5 – PREPAID EXPENSES For the fiscal year ended December 31, 2021, prepaid expenses included professional expenses related to initial public offering, such as legal and accounting fees. During the 2022 fiscal year, prepaid expenses were fully netted against IPO proceeds. |
Advances to Suppliers and Other
Advances to Suppliers and Other | 12 Months Ended |
Dec. 31, 2022 | |
Advances to Suppliers [Abstract] | |
ADVANCES TO SUPPLIERS AND OTHER | NOTE 6 – ADVANCES TO SUPPLIERS AND OTHER Advances to suppliers as of December 31, 2022 and 2021 consisted of the following: 2022 2021 Advance to suppliers $ 515,137 $ 2,112,852 Advance payment for potential land purchase 4,201,354 - Total 4,716,491 2,112,852 As of December 31, 2022, there was $4,201,354 included in advances to suppliers, which was relating to potential oversea land purchase for the purpose of expanding business in North America. The advance was paid to a third-party company, who signed an agreement with the Company to seek the suitable land on the Company’s behalf. If the third-party company fails to locate the land that meet the Company’s requirements within 180 days of the signed date of the agreement, the agreement terminates, and the third-party company will return the $4.2 million advance received from the Company. The breakdown of the advance payment for potential land purchase is as follows: Advance payment for land purchase $ 4,000,000 Advance on refundable consulting fee 200,000 Advance payment for travelling and hotel expenses 1,354 Total $ 4,201,354 On May 5, 2023, the Company received $4 million of returned advances related to the potential land purchase. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 7 – PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of December 31, 2022 and 2021 consisted of the following: 2022 2021 Machinery and equipment $ 1,268,443 $ 884,397 Transportation vehicles 230,287 215,653 Electronic devices 69,062 62,497 Office furniture and equipment 577,287 404,557 Leasehold improvements 200,800 - Building 300,223 294,472 Total property plant and equipment, at cost 2,646,102 1,861,576 Less: accumulated depreciation 983,947 781,593 Property, plant and equipment, net $ 1,662,155 $ 1,079,983 As of December 31, 2022 and 2021, the Company had no impaired or pledged property and equipment. Additions to property and equipment for the years ended December 31, 2022 and 2021 were $926,117 and $323,287, respectively. There were no disposals for the years ended December 31, 2022 and 2021. Total depreciation expenses were $268,346, $215,121 and $148,194 for the years ended December 31, 2022, 2021 and 2020, respectively. Depreciation expenses included in cost of sales were $184,542, $121,455 and $57,041 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | NOTE 8 – INTANGIBLE ASSETS Intangible assets as of December 31, 2022 and 2021 consisted of the following: 2022 2021 Intangible assets Cost $ 13,136 $ 14,060 Accumulated amortization (2,851 ) (1,709 ) Additions, at cost - 157 Amortization current year (1,471 ) (1,415 ) Intangible assets, net $ 8,814 $ 11,093 The intangible assets represent the ERAYAK trademark and the Company’s purchase of patents related to new technologies to produce inverters. There were no disposals for the years ended December 31, 2022 and 2021. During the years of December 31, 2022 and 2021, the Company had no impaired or pledged intangibles. Five succeeding years of amortization are as follows: Year Amortization Net carrying value 2023 $ 1,314 $ 7,500 2024 1,314 6,186 2025 1,314 4,872 2026 1,314 3,558 2027 1,314 2,244 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | NOTE 9 – LEASES The Company has one related party lease for the land where it operates with no option to renew, and the Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. After paid part of the 20-year lease payment, the Company secured the right to use of property, and the lessor, Wenzhou Ailefu Technology Co., Ltd (“Ailefu”), provided the leased assets as guarantee for the Company to apply bank loan, and the lease payment for the future 20 years have been prepaid. The Company sub-leases part of the property and uses rental income to cover part or all of the interest expense on the bank loan. The related bank loan is disclosed in Note 11 – Long-term Loan. Rental income from the sublease is disclosed in Note 17 – Rental Income, Net. Relation between the Company and Ailefu is disclosed in Note 20 – Related Party Transactions. The ending balances of right of use assets, net of amortization were $7,665,013 and $8,849,073 as of December 31, 2022 and 2021, respectively. |
Short-Term Borrowings
Short-Term Borrowings | 12 Months Ended |
Dec. 31, 2022 | |
Short-Term Borrowings [Abstract] | |
SHORT-TERM BORROWINGS | NOTE 10 – SHORT-TERM BORROWINGS Short-term borrowings consisted of the following as of December 31, 2022 and 2021: As of 2022 2021 Short-term borrowing from financial institutions $ 4,777,301 $ 4,078,425 Short-term borrowing from third-party individual - 108,503 Government loan 1,449,864 1,569,218 Total $ 6,227,165 $ 5,756,146 Short-term borrowings from financial institutions consisted of the following at December 31, 2022: Bank Name Amount – RMB Amount – USD Issuance Date Expiration Date Interest Longwan Rural Commercial Bank 1,200,000 173,984 2022.06.15 2023.06.14 9.60 % Longwan Rural Commercial Bank 1,750,000 253,725 2022.06.15 2023.06.14 9.60 % Minsheng Bank 10,000,000 1,449,864 2022.08.02 2023.02.02 4.10 % Minsheng Bank 10,000,000 1,449,864 2022.08.09 2023.08.09 4.10 % Minsheng Bank 10,000,000 1,449,864 2022.08.16 2023.08.15 4.10 % Total RMB 32,950,000 $ 4,777,301 Short-term borrowings from financial institutions consisted of the following at December 31, 2021: Bank Name Amount – RMB Amount – USD Issuance Date Expiration Date Interest Longwan Rural Commercial Bank 1,750,000 $ 274,622 2021.07.06 2022.07.05 10.00 % Longwan Rural Commercial Bank 1,200,000 188,312 2021.07.06 2022.07.05 9.61 % Minsheng Bank 6,500,000 1,020,023 2021.04.16 2022.04.15 4.35 % Minsheng Bank 13,500,000 2,118,509 2021.04.12 2022.04.08 4.30 % WeBank Shenzhen 1,510,000 236,959 2021.12.24 2021.12.31 7.92 % Bank of Ningbo 650,321 102,000 2021.12.01 2022.02.28 4.30 % Bank of Ningbo 605,692 95,000 2021.12.01 2022.02.28 3.01 % Bank of Ningbo 229,525 36,000 2021.12.01 2022.02.28 4.30 % Bank of Ningbo 44,630 7,000 2021.12.01 2022.02.28 4.30 % Total RMB 25,990,168 $ 4,078,425 The Company’s short-term bank borrowings are guaranteed by the Company’s major shareholders, their immediate family members, and related companies. For the fiscal years ended December 31, 2022, 2021 and 2020, interest expenses on short-term borrowings from financial institutions amounted to $192,198, $139,764 and $91,529, respectively. For the fiscal year ended December 31, 2022, the imputed interest expense recorded by the Company on the government loan was $54,614. For the fiscal year ended December 31, 2021, the imputed interest expense recorded by the Company on the third-party individual and the government loan were $10,538 and $59,657, respectively. |
Long-Term Loan
Long-Term Loan | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Borrowings [Abstract] | |
LONG-TERM LOAN | NOTE 11 – LONG-TERM LOAN As of December 31, 2022, the long-term loan consisted of the following: Description Amount – RMB Amount – USD Issuance Date Expiration Date Interest WeBank Shenzhen 500,000 72,493 2022.10.06 2024.09.23 7.27 % WeBank Shenzhen 400,120 58,012 2022.10.23 2024.10.23 6.55 % WeBank Shenzhen 600,180 87,018 2022.12.30 2024.12.23 7.13 % Minsheng Bank 30,000,000 4,349,591 2021.04.12 2023.04.08 4.70 % Subtotal 31,500,300 4,567,114 Current portion of long-term loans (30,000,000 ) (4,349,591 ) Total RMB 1,500,300 $ 217,523 As of December 31, 2021, the long-term loan included only the two-year loan issued by Minsheng Bank in the amount of $4,707,655, and the difference compared to December 31, 2022 was due to the difference in exchange rates. This loan was secured by the leased property from Ailefu, which is disclosed in Note 9 - Leases. For the fiscal years ended December 31, 2022 and 2021, interest expenses on long-term loan amounted to $212,451 and $153,611. |
Sales
Sales | 12 Months Ended |
Dec. 31, 2022 | |
Sales [Abstract] | |
SALES | NOTE 12 – SALES Disaggregated sales by types as of December 31, 2022, 2021 and 2020 consisted of the following: 2022 2021 2020 Inverters $ 14,065,166 $ 15,356,847 $ 12,751,905 Chargers 582,040 1,400,506 745,955 Gasoline generators 11,790,582 1,542,670 446,292 Other products 471,237 328,863 177,686 Total $ 26,909,025 $ 18,628,886 $ 14,121,838 There is no warranty, discount or return policy documented in the sales agreements. |
General and Administrative Expe
General and Administrative Expenses | 12 Months Ended |
Dec. 31, 2022 | |
General and Administrative Expenses [Abstract] | |
GENERAL AND ADMINISTRATIVE EXPENSES | NOTE 13 – GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses as of December 31, 2022, 2021 and 2020 consisted of following: 2022 2021 2020 Employee compensation and benefits $ 312,479 323,325 $ 200,040 Travel and communication expenses 34,267 33,068 38,629 Rent and utilities 58,466 70,178 35,094 Consulting fees 310,039 53,169 157,234 Insurance 13,165 16,699 - Depreciation and amortization expenses 60,698 55,042 44,443 Sales tax 80,595 82,052 46,569 Entertainment 17,193 5,193 14,703 Office and miscellaneous 42,598 51,893 7,917 Total $ 929,500 690,619 $ 544,629 |
Selling and Marketing Expenses
Selling and Marketing Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Selling and Marketing Expenses [Abstract] | |
SELLING AND MARKETING EXPENSES | NOTE 14 – SELLING AND MARKETING EXPENSES Selling and marketing expenses as of December 31, 2022, 2021 and 2020 consisted of the following: 2022 2021 2020 Employee compensation and benefits $ 141,600 $ 99,797 $ 106,623 Travel and promotion 36,768 45,083 47,199 Transportation 181,556 78,281 47,886 Insurance - 2,813 2,561 Consulting fee 6,917 6,203 - Inspection and certification fees 196,732 77,352 108,062 Entertainment 140,292 166,295 - Office and miscellaneous 16,255 30,481 12,978 Total $ 720,120 $ 506,305 $ 325,309 |
Research and Development Expens
Research and Development Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Research and Development Expenses [Abstract] | |
RESEARCH AND DEVELOPMENT EXPENSES | NOTE 15 – RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses as of December 31, 2022, 2021 and 2020 consisted of the following: 2022 2021 2020 Salaries $ 427,525 $ 347,434 $ 224,691 Contract services and supplies 409,149 541,055 303,494 Utility 2,025 1,777 775 Design cost 46,651 - - Depreciation 22,499 39,365 46,710 Other 24,419 57,254 29,445 Total $ 932,268 $ 986,885 $ 605,115 |
Interest Expenses, Net
Interest Expenses, Net | 12 Months Ended |
Dec. 31, 2022 | |
Interest Expenses, Net [Abstract] | |
INTEREST EXPENSES, NET | NOTE 16 – INTEREST EXPENSES, NET Interest expenses as of December 31, 2022, 2021 and 2020 consisted of the following: 2022 2021 2020 Interest expense $ 499,746 $ 451,689 $ 261,899 Interest income (26,658 ) (34,041 ) (15,936 ) Total interest expense, net $ 473,088 $ 417,648 $ 245,963 |
Rental Income, Net
Rental Income, Net | 12 Months Ended |
Dec. 31, 2022 | |
Rental Income, Net [Abstract] | |
RENTAL INCOME, NET | NOTE 17 – RENTAL INCOME, NET The Company subleases part of the leased assets on a straight-line basis to other third parties. The lease terms with lessees vary and usually start from two years. Rental income as of December 31, 2022, 2021 and 2020 consisted of the following: 2022 2021 2020 Rental income $ 388,058 416,692 $ 325,839 Rental expense (289,342 ) (300,499 ) (3,419 ) Total rental income, net $ 98,716 116,193 $ 322,420 |
Other Income, Net
Other Income, Net | 12 Months Ended |
Dec. 31, 2022 | |
Other Income and Expenses [Abstract] | |
OTHER INCOME, NET | NOTE 18 – OTHER INCOME, NET Other income as of December 31, 2022, 2021 and 2020 consisted of the following: 2022 2021 2020 Government grant $ 194,001 $ 169,827 $ 220,245 Inspection and certification reimbursement - 328,589 - Sampling reimbursement - 26,462 - Exchange gains (losses) 31,749 3,686 (5,481 ) Bank charges (11,397 ) (11,906 ) (11,156 ) Miscellaneous income 10,762 10,019 15,003 Miscellaneous expenses (5,585 ) (14,265 ) (4,646 ) Total other income, net $ 219,530 512,412 $ 213,965 The Company paid inspection and certification charges on products, and some customers reimbursed them during the 2021 fiscal year. These reimbursements are non-recurring. |
Customer and Supplier Concentra
Customer and Supplier Concentrations | 12 Months Ended |
Dec. 31, 2022 | |
Customer and Supplier Concentrations [Abstract] | |
CUSTOMER AND SUPPLIER CONCENTRATIONS | NOTE 19 – CUSTOMER AND SUPPLIER CONCENTRATIONS Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases. The Company sold a substantial portion of products to two customers (14.67% and 10.82% of total revenues) during fiscal year 2022. As of December 31, 2022, amount due from these customers included in accounts receivable were $2,178,000 and $636,639, representing 21.86% and 6.39%, respectively, of total accounts receivable. Beside the significant customer, there were other significant concentrations of accounts receivable, which included four customers who accounted for 18.08%, 15.85%, 11.58% and 10.24%, respectively, of the total accounts receivable for the fiscal year ended December 31, 2022. The Company sold a substantial portion of products to two customers (16% and 11% of total revenues) during fiscal year 2021. As of December 31, 2021, amount due from these customers included in accounts receivable was $46,633, representing 2.65% of total accounts receivable. There was another significant concentration of accounts receivable from one customer for the year ended December 31, 2021, which represented 49.60% of total accounts receivable. The Company sold a substantial portion of products to three customers (16%, 15% and 10% of total revenues) during fiscal year 2020. As of December 31, 2020, amount due from these customers included in accounts receivable was $3,198,122, representing 63% of total accounts receivable. There was no other significant concentration of accounts receivable for the year ended December 31, 2020. The loss of one significant customer or the failure to attract new customers could have a material adverse effect on our business, consolidated results of operations and financial condition. For the years ended December 31, 2022, 2021 and 2020, there was no significant concentration in suppliers for the Company’s raw material purchase. The Company has numerous suppliers that could be substituted should any of the current suppliers become unavailable or non-competitive. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 20 – RELATED PARTY TRANSACTIONS 1) Nature of relationships with related parties Name Relationship with the Company Wenzhou Ailefu Technology Co. Ltd. (“Ailefu”) An entity 100% owned by Xiangze Hangzhou Xiangze Trading Co. Ltd. (“Xiangze”) An entity 100% owned by Lingyi Kong Wenzhou Weidi Technology Co. Ltd. (“Weidi”) An entity 100% owned by Chuanlong Lin’s wife Shanghai Fushishenye Mechanical and Electrical Equipment Co. Ltd. (“Fushishenye”) An entity with Lingyi Kong as legal rep Ruian Xiaobai New Energy Automobile Rental Co. Ltd. (“Xiaobai”) An entity 30% owned by Shengling Xiang Chuanlong Lin Relative of Lingyi Kong; former controlling shareholder of New Focus Shengling Xiang Executive and legal rep of the Company Lingyi Kong Controlling shareholder of the Company Chunhua Xiang Relative of Lingyi Kong 2) Related party transactions The Company leases offices and factory premises from Ailefu. The nature of the lease is disclosed in Leases in Note 9. There were no transactions between the Company and Weidi, the Company and Xiangze, the Company and Fushishenye, and the Company and Xiaobai for the fiscal years of 2022 and 2021. Lingyi Kong periodically provides working capital to support the Company’s operations when needed. As of December 31, 2022 and 2021, the Company had outstanding payable due to Lingyi Kong with an amount of $344,528 and $158,198, respectively. This represented unsecured, due on demand and interest free borrowings between the Company and Lingyi Kong. For the fiscal years of 2022 and 2021, there were notes receivables endorsed by Lingyi Kong with recourse to the Company’s suppliers to settle accounts payable in the amount of $2,844,019 and $5,043,783, respectively. During fiscal years 2022 and 2021, Lingyi Kong provided total working capital of $22,696,628 and $14,344,678, respectively. Shengling Xiang periodically provides working capital to support the Company’s operations when needed. As of December 31, 2022 and 2021, the Company had outstanding payable due to Shengling Xiang with an amount of $46,623 and $0, respectively. This represented unsecured, due on demand and interest free borrowings between the Company and Shengling Xiang. During fiscal years 2022 and 2021, Shengling Xiang provided working capital of $483,498 and $27,177, respectively. Chuanlong Lin periodically provides working capitals to support the Company’s operations when needed. During fiscal year 2022 and 2021, Chuanlong Lin provided working capital of $0 and $11,130, respectively. As of December 31, 2022 and 2021, the Company had no outstanding balance from this individual. Chunhua Xiang periodically provides working capitals to support the Company’s operations when needed. During fiscal year 2022 and 2021, Chunhua Xiang provided working capital of $780,131 and $928,439, respectively. As of December 31, 2022 and 2021, the Company had no outstanding balance from this individual. 3) Related party balances Net outstanding balances with related parties consisted of the following as of December 31, 20221 and 2021: Accounts Name of related parties 2022 2021 Due to related party Lingyi Kong (344,528 ) (158,198 ) Shengling Xiang (46,623 ) - Net due to related parties $ (391,151 ) $ (158,198 ) |
Shareholders_ Equity
Shareholders’ Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS’ EQUITY | NOTE 21 – SHAREHOLDERS’ EQUITY Ordinary shares The Company is authorized to issue 500,000,000 ordinary shares of par value of $0.0001 each, comprising of: (i) 450,000,000 Class A Ordinary Shares of par value of USD0.0001 each, and (ii) 50,000,000 Class B Ordinary Shares of par value of USD0.0001 each. There are currently 11,000,000 issued and outstanding Class A Ordinary Shares and 1,000,000 issued and outstanding Class B Ordinary Shares, of which 6,000,000 Class A and 1,000,000 Class B Ordinary Shares are owned by Erayak International Limited, 1,400,000 Class A Ordinary Shares are owned by CEC Science and Innovation Co., Ltd., and 600,000 Class A Ordinary Shares are owned by Grand Merchant Incorporation Limited. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at all times vote together as one class on all resolutions submitted to a vote by the Members. Each Class A Ordinary Share shall entitle the holder thereof to one (1) vote on all matters subject to vote at general meetings of the Company, and each Class B ordinary share shall entitle the holder thereof to twenty (20) votes on all matters subject to vote at general meetings of the Company. Each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share at any time at the option of the holder thereof. In no event shall Class A Ordinary Shares be convertible into Class B Ordinary Shares. Save and except for voting rights and conversion rights, the Class A Ordinary Shares and the Class B Ordinary Shares shall rank pari passu with one another and shall have the same rights, preferences, privileges and restrictions. Initial Public Offering On December 14, 2022, the Company consummated its initial public offering (“IPO”) of 3,000,000 Class A ordinary shares at a price of $4.00 per share, generating gross proceeds to the Company of $12,000,000 before deducting underwriting discounts and commissions and offering expenses. After deducting underwriting discounts, commissions and expenses related to the offering, the Company recorded $10,646,322 (with $1,200 in par value and $10,645,122 in additional paid in capital) net proceeds from its initial public offering. The underwriter was granted a 45-day over-allotment option to purchase up to an additional 450,000 Class A ordinary shares at the initial public offering price. Meanwhile, other costs incurred in the IPO totaled $1,061,170, the main nature of which was professional fees. As a result, Class A shares increased by $300, and additional paid-in capital increased by $9,584,612. Statutory Reserve The Company’s PRC subsidiaries are required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors of each of the PRC subsidiary. The reserved amounts as determined pursuant to PRC statutory laws totaled $916,912 and $568,418 as of December 31, 2022 and 2021, respectively. Under PRC laws and regulations, paid in capital, additional paid in capital, and statutory surplus reserves are restricted to set-off against losses, expansion of production and operation and increasing registered capital of the respective company and are not distributable other than upon liquidation. The reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor allowed for distribution except under liquidation. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 22 – INCOME TAXES Enterprise Income Taxes (“EIT”) Erayak Power Solution Group Inc. is incorporated in Cayman Island as an offshore holding company and is not subject to tax on income or capital gain under the laws of Cayman Island. Erayak Power Solution Limited is incorporated in BVI as an offshore holding company and is not subject to tax on income or capital gain under the laws of BVI. Erayak Power Solution Hong Kong Limited is established in Hong Kong and is subject to statutory income tax rate at 16.5%. Wenzhou Wenjie Technology Limited is established in PRC and is subject to statutory income tax rate at 25%. Beijing Leiya Meijia Technology Co., Limited is established in PRC and is subject to statutory income tax rate at 25%. Zhejiang Leiya Electronics Limited and Wenzhou New Focus Limited are the Company’s main operating subsidiaries in PRC. Zhejiang Leiya Electronics is a high technology company and has applicable EIT rate of 15%. Wenzhou New Focus Limited has applicable EIT rate of 5%. As of December 31, 2022, the tax years ended December 31, 2017 through December 31, 2022 for the Company’s PRC entities remain open for statutory examination by PRC tax authorities. 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, 2022, 2021, and 2020, 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 fiscal years ended December 31, 2022, 2021, and 2020, respectively, and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2022. Per the consolidated statements of income and comprehensive income, the income tax expenses for the Company can be reconciled to the income before income taxes for the years ended December 31, 2022, 2021, and 2020 as follows: 2022 2021 2020 Income before taxes excluded the amounts of loss incurring entities $ 3,887,240 $ 3,786,691 $ 2,636,948 PRC EIT tax rates 15 % 15 % 15 % Tax at the PRC EIT tax rates $ 583,086 $ 568,005 395,542 Tax effect of R&D expenses deduction (139,840 ) (148,033 ) (67,793 ) Tax effect of accumulated loss (18,166 ) (23,132 ) (4,835 ) Tax effect of non-deductible expenses 12,692 11,424 62,827 Tax refund from prior years - (106,348 ) - Income tax expenses $ 437,771 $ 301,916 $ 385,741 Income taxes for the years ended December 31, 2022, 2021 and 2020 are attributed to the Company’s continuing operations in China and consisted of: 2022 2021 2020 Current income tax $ 437,771 $ 332,549 $ 386,389 Deferred income tax - (30,633 ) (648 ) Total income tax expense $ 437,771 $ 301,916 $ 385,741 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022, 2021 and 2020 are presented below: As of December 31, 2022 2021 2020 Deferred tax assets: Opening balance $ (36,247 ) $ (5,116 ) $ (4,153 ) Accumulated loss - (23,132 ) (648 ) Bad debt - (397 ) - Obsolete inventory - (7,104 ) - Effect of exchange rate 2,757 (498 ) (315 ) Total $ (33,490 ) $ (36,247 ) $ (5,116 ) There was no valuation allowance for the deferred tax assets as of December 31, 2022 and 2021. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. 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 scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income, projections for future taxable income over the periods in which the deferred tax assets are deductible, and the scheduled reversal of deferred tax liabilities, management believes it is more likely than not the company will realize the benefits of those deductible differences at December 31, 2022 and 2021. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 23 – COMMITMENTS AND CONTINGENCIES As of December 31, 2022 and 2021, the Company had no From time to time, the Company is involved in various legal proceedings, claims and other disputes arising from commercial operations, employees, and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity. As of December 31, 2022 and 2021, Company had no pending legal proceedings outstanding. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 24 – SEGMENT REPORTING ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results as one operating segment. The Company has single operating entity at a single location, and all of the products are electrical products and use the similar product line and labors. Based on management’s assessment, the Company has determined that it has only one operating segment as defined by ASC 280. The following tables present revenue by five major international markets for the fiscal years ended December 31, 2022, 2021 and 2020, respectively. December 31, 2022 Top Five International Markets: Sales As % China $ 18,033,220 67.02 % Poland 1,607,394 5.97 % Germany 1,217,732 4.53 % Canada 971,909 3.61 % U.K. 879,733 3.27 % December 31, 2021 Top Five International Markets: Sales As % China $ 10,638,503 57.11 % France 1,202,988 6.46 % Poland 1,129,165 6.06 % Mexico 1,071,869 5.75 % U.K. 790,326 4.24 % December 31, 2020 Top Five International Markets: Sales As % China $ 9,558,270 67.68 % France 886,074 6.27 % Poland 555,097 3.93 % Germany 465,042 3.29 % Mexico 309,180 2.19 % |
Financial Impact of Covid-19
Financial Impact of Covid-19 | 12 Months Ended |
Dec. 31, 2022 | |
Financial Impact of Covid-19 [Abstract] | |
FINANCIAL IMPACT OF COVID-19 | NOTE 25 – FINANCIAL IMPACT OF COVID-19 In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which spreaded throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern,” and on March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic.” Governments in affected countries were imposing travel bans, quarantines and other emergency public health measures, which had caused material disruption to businesses globally resulting in an economic slowdown. As the PRC government announced optimization of COVID-19 rules in November 2022, many of the restrictive measures previously adopted by the PRC governments at various levels to control the spread of the COVID-19 virus have been revoked or replaced with more flexible measures. The financial impact of COVID-19 outbreak on the Company’s financial condition and results of operations is declining. However, for the full fiscal year of 2023, the Company is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity and results of operations. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 26 – SUBSEQUENT EVENTS On January 5, 2023, the Company paid an advance of $1 million to a third-party company, which was related to potential oversea land and warehouses purchase for the purpose of expanding business in Southeast Asia. On February 10, 2023, the Company repaid government loan of RMB 4 million, and expects to repay the rest RMB 6 million after receiving a public company grant of RMB 6 million from the government during the second half of 2023. On May 5, 2023, the Company received $4 million of returned advances related to the oversea land purchase in North America, which was disclosed in Note 6 above. The Company has evaluated subsequent events through the date the financial statements were available to be issued. No other matters were identified affecting the accompanying financial statements or related disclosures. |
Condensed Financial Information
Condensed Financial Information of the Parent Company | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | NOTE 27 — CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X require the condensed financial information of the parent company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such requirement and concluded that it was applicable to the Company as the restricted net assets of the Company’s PRC subsidiaries exceeded 25% of the consolidated net assets of the Company, therefore, the condensed financial statements for the parent company are included herein. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party. The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries. Such investment is presented on the condensed balance sheets as “Investment in subsidiaries” and the respective profit or loss as “Equity in earnings of subsidiaries” on the condensed statements of comprehensive income. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the audited consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S GAAP have been condensed or omitted. The Company did not pay any dividend for the periods presented. As of December 31, 2022 and 2021, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any. December 31, December 31, ASSETS Current assets Cash 6,417,339 - Advances to suppliers and other 4,201,354 - Non-current assets Investment in subsidiaries $ 8,726,358 $ 6,894,322 Total assets $ 19,345,051 $ 6,894,322 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES $ 1,000 $ - COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY Class A shares, 450,000,000 shares authorized; 11,000,000 shares issued and outstanding as of December 31, 2022; 8,000,000 shares issued and outstanding as of December 31, 2021 1,100 800 Class B shares, 50,000,000 shares authorized; 1,000,000 shares issued and outstanding as of December 31, 2022 and 2021 100 100 Additional paid-in capital 10,645,122 1,060,510 Retained earnings 9,081,671 5,605,710 Accumulated other comprehensive (loss) gain (383,942 ) 227,202 Total shareholders’ equity 19,344,051 6,894,322 Total liabilities and shareholders’ equity $ 19,345,051 $ 6,894, 322 For the Years Ended 2022 2021 2020 EQUITY IN EARNINGS OF SUBSIDIARIES $ 3,475,961 $ 3,394,649 $ 2,213,372 NET INCOME 3,475,961 3,394,649 2,213,372 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (611,144 ) 122,397 193,531 COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $ 2,864,817 $ 3,517,046 $ 2,406,903 For the Years Ended December 31, 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,475,961 $ 3,394,649 $ 2,213,372 Adjustments to reconcile net cash flows from operating activities: Equity in earnings of subsidiaries (3,475,111 ) (3,394,649 ) (2,213,372 ) Changes in operating assets and liabilities: Other current liabilities (1,000 ) - - Net cash used in operating activities (150 ) - - CASH FLOW FROM INVESTING ACTIVITIES Advance for potential land purchase (4,201,354 ) - - Net cash used in investing activities (4,201,354 ) - - CASH FLOW FROM FINANCING ACTIVITIES Proceeds from IPO 10,080,231 - - Net cash provided in financing activities 10,080,231 - - EFFECT OF FOREIGN EXCHANGE 538,612 CHANGES IN CASH AND RESTRICTED CASH 6,417,339 - - CASH AND RESTRICTED CASH, beginning of year - - - CASH AND RESTRICTED CASH, end of year $ 6,417,339 $ - - |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles in the United Stated of America (“US GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of the Company and its majority-owned and controlled subsidiaries. All significant inter-company transactions and balances have been eliminated upon consolidation. |
Going Concern Consideration | Going Concern Consideration As of December 31, 2022, the Company had a negative cash flow from operating activities of $4,151,135. The Company meets its day-to-day working capital requirements through its bank facilities. Most of the bank borrowings as of December 31, 2022, that are repayable within the next 12 months, are subject to renewal, and the management is confident that these borrowings can be renewed upon expiration based on the Company’s past experience and credit history. In addition, the Company had a positive working capital of $10,192,102 as of December 31, 2022. In order to strengthen the Company’s liquidity in the foreseeable future, the Company has taken the following measures: (i) Negotiating with banks in advance for renewal and obtaining new banking facilities; (ii) Taking various cost control measures to tighten the costs of operations; and (iii) Implementing various strategies to enhance sales and profitability. The management has a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, and therefore the going concern consideration raised from the negative cash flow from operating activities is not an issue. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Such estimates include, but are not limited to, allowances for doubtful accounts, inventory valuation, useful lives of property, plant and equipment, intangible assets, and income taxes related to realization of deferred tax assets and uncertain tax position. Actual results could differ from those estimates. |
Foreign Currency Translation | Foreign Currency Translation The financial records of the Company’s subsidiaries in People’s Republic of China (“PRC”) are maintained in their local currencies which are Chinese Yuan (“CNY” or “RMB”). Monetary assets and liabilities denominated in currencies other than their local currencies are translated into local currencies at the rates of exchange in effect at the consolidated balance sheet dates. Transactions denominated in currencies other than their local currencies during the year are converted into local currencies at the applicable rates of exchange prevailing when the transactions occur. Transaction gains and losses are recorded in other income/(expense), net in the consolidated statements of income and comprehensive income. The Company maintained its financial record using the United States dollar (“US dollar”) as the functional currency, while the subsidiaries of the Company in Hong Kong and mainland China maintained their financial records using RMB as the functional currencies. The reporting currency of the Company is US dollar. When translating local financial reports of the Company’s subsidiaries into US dollar, assets and liabilities are translated at the exchange rates at the consolidated balance sheet date, equity accounts are translated at historical exchange rates and revenue, expenses, gains and losses are translated at the average rate for the period. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income in the consolidated statements of income and comprehensive income. The relevant exchange rates are listed below: For the Years Ended December 31 2022 2021 2020 Period Ended RMB: USD exchange rate 6.8972 6.3726 6.5250 Period Average RMB: USD exchange rate 6.7290 6.4508 6.9042 |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents primarily consist of cash and deposits with financial institutions which are unrestricted as to withdrawal and use. Cash equivalents consist of highly liquid investments that are readily convertible to cash generally with original maturities of three months or less when purchased. |
Restricted Cash | Restricted Cash The Company had bank acceptance notes outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. Those notes are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset. As of December 31, 2022, and 2021, restricted cash was $34,728 and $0 |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivables are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. The Company records adjustments to inventory for excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value. These adjustments are based upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory. |
Advances to Suppliers | Advances to Suppliers Advances to suppliers refer to advances for purchase of materials or other service agreements, which are applied against accounts payable when the materials or services are received. The Company reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would write off such amount in the period when it is considered impaired. For the years ended December 31, 2022, 2021 and 2020, the Company had no write-offs for advances to suppliers. |
Advances from Customers | Advances from Customers Advances from customers refer to advances received from customers regarding product sales, which are applied against accounts receivable when products are sold. |
Property, Plant and Equipment, net | Property, Plant and Equipment, net Property, plant, and equipment are recorded at cost less accumulated depreciation. Depreciation commences upon placing the asset in use and is recognized on a straight-line basis over the estimated useful lives of the assets with 5% of residual value, as follows: Useful lives Buildings 10-20 years Machinery and equipment 5-20 years Transportation vehicles 3-10 years Office equipment 3-10 years Electronic equipment 3-10 years Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. |
Intangible Assets | Intangible Assets Intangible assets consist of patents and a trademark. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Useful lives Patents 10 years Trademark 10 years |
Leases/Right of use assets | Leases/Right of use assets Effective January 1, 2018, the Company adopted the new lease accounting standard using a modified retrospective transition method which allowed the Company not to recast comparative periods presented in its consolidated financial statements. In addition, the Company elected the package of practical expedients, which allowed the Company to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company combines the lease and non-lease components in determining the ROU assets and related lease obligation. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities as disclosed in financial statements. ROU assets and related lease obligations are recognized at commencement date based on the present value of remaining lease payments over the lease term. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company’s management reviews the carrying values of long-lived assets whenever events and circumstances, such as a significant decline in the asset’s market value, obsolescence or physical damage affecting the asset, significant adverse changes in the assets use, deterioration in the expected level of the assets performance, cash flows for maintaining the asset are higher than forecast, indicate that the net book value of an asset may not be recovered through expected future cash flows from its use and eventual disposition. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There was no impairment charge recognized for long-lived assets for the years ended December 31, 2022, 2021 and 2020. |
Fair Value Measurement | Fair Value Measurement Fair Value Measurements and Disclosures requires disclosure of the fair value of financial instruments held by the Company. 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 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 prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. For the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, other current liabilities, notes payable, bank loans, and other receivables, the carrying amounts approximate their fair values due to their short maturities as of December 31, 2022, 2021 and 2020. |
Value-added Tax (“VAT”) | Value-added Tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. All of the Company’s products that are sold in the PRC are subject to a VAT on the gross sales price. The Company is subject to a VAT rate of 17% before May 1, 2018, 16% on and after May 1, 2018, and a new VAT rate of 13% effective on April 1, 2019. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. |
Revenue Recognition | Revenue Recognition The Company generates its revenues mainly from sales of electrical products, such as electrical converters and inverters, to third-party customers, who are mainly distributors and retailers. The Company follows Financial Accounting Standards Board (FASB) ASC 606 and accounting standards updates (“ASU”) 2014-09 for revenue recognition. On January 1, 2018, the Company has early adopted ASU 2014-09, which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In the principal versus agent consideration, since no another party is involved in transactions, the Company is a principal. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company analyzed historical refund claims for defective products and concluded that they have been immaterial. Revenues are reported net of all value added taxes. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied at a point in time), which typically occurs at delivery. For international sales, the Company sells its products primarily under the free onboard (“FOB”) shipping point term. For sales under the FOB shipping point term, the Company recognizes revenues when products are delivered from Company to the designated shipping point. Prices are determined based on negotiations with the Company’s customers and are not subject to adjustment. |
Rental income | Rental income Rental income from the subleases of part of the leased assets under operating leases is recognized in the statements of comprehensive income on a straight-line basis over the term of the lease. |
Government Grant | Government Grant Government grants are the compensation for expenses already incurred or for the purpose of giving immediate financial support to the Company. The government evaluates the Company’s eligibility for the grants on a consistent basis, and then makes the payment. Therefore, there are no restrictions on the grants. Government grants are recognized when received and all the conditions for their receipt have been met. The grants received were $194,001, $169,827, and $220,245 for the years ended December 31, 2022, 2021 and 2020, respectively, which were included in other income on Consolidated Statement of Income and Comprehensive Income. |
Research and Development Costs | Research and Development Costs Research and development activities are directed toward the development of new products as well as improvements in existing processes. These costs, which primarily include salaries, contract services and supplies, are expensed as incurred. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are expensed when incurred and are included in selling and marketing expense. Shipping and handling costs were $181,556, $78,281, and $24,231 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred in accordance with ASC 720-35, “Other Expenses-Advertising Costs”. Advertising costs were $8,513, $5,873, and $11,724 for years ended December 31, 2022, 2021 and 2020, respectively. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method whereby it calculates deferred tax assets or liabilities for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, net operating loss carry forwards and credits by applying enacted tax rates applicable to the years in which those temporary differences are expected to be reversed or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The components of the deferred tax assets and liabilities are individually classified as non-current amounts. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. To the extent applicable, the Company records interest and penalties as other expense. All of the tax returns of the Company’s PRC subsidiaries remain subject to examination by PRC tax authorities for five years from the date of filing. The fiscal year for tax purpose in PRC is December 31. In the case of tax evasion, which is not clearly defined in the law, there is no limitation on the tax years open for investigation. Accordingly, the PRC entities' tax years from 2018 to 2022 remain subject to examination by the tax authorities. There were no ongoing examinations by tax authorities as of December 31, 2022 and 2021. The Company and its subsidiaries are not subject to U.S. tax laws and local state tax laws. The Company’s income and that of its related entities must be computed in accordance with Chinese and foreign tax laws, as applicable, and all of which may be changed in a manner that could adversely affect the amount of distributions to shareholders. There can be no assurance that Income Tax Laws of PRC will not be changed in a manner that adversely affects shareholders. In particular, any such change could increase the amount of tax payable by the Company, reducing the amount available to pay dividends to the holders of the Company’s ordinary shares. |
Earnings Per Share | Earnings Per Share Earnings (loss) per share is calculated in accordance with ASC 260 Earnings per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is computed in accordance with the treasury stock method and based on the weighted average number of ordinary shares and dilutive ordinary share equivalents. Dilutive ordinary share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive. There were no dilutive ordinary share equivalents outstanding during the years ended December 31, 2022, 2021 and 2020. The Company did not use the two-class method to compute net income per ordinary share, because it did not have other issued securities other than ordinary shares. Class A and Class B shares are both ordinary shares, and per Article 6 in Memorandum and Articles of Association (amended and restated), they have the same rights, preferences, privileges, and restrictions, except for voting and conversion rights. |
Comprehensive income/(loss) | Comprehensive income/(loss) Comprehensive income/(loss) is defined as the changes in shareholders’ equity during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive income or loss is reported in the consolidated statements of comprehensive income/(loss). Accumulated other comprehensive income/(loss), as presented on the accompanying consolidated balance sheets, consists of accumulated foreign currency translation adjustments. |
Certain Risks and Concentration | Certain Risks and Concentration Exchange Rate Risks The Company operates in PRC, which may give rise to significant foreign currency risks mainly from fluctuations and the degree of volatility of foreign exchange rates between the USD and the RMB. Currency Convertibility Risks Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, notes receivable. The Company places its cash and cash equivalents, restricted cash, and note receivable in good credit quality financial institutions in Hong Kong and PRC. Concentration of credit risks with respect to accounts receivables is linked to the concentration of revenue. To manage credit risk, the Company performs ongoing credit evaluations of customers’ financial condition. Interest Rate Risks The Company is subject to interest rate risk. The Company has bank interest bearing loans charged at variable interest rates. And although some bank interest bearing loans are charged at fixed interest rates within the reporting period, the Company is still subject to the risk of adverse changes in the interest rates charged by the banks when these loans are refinanced. Risks and Uncertainties The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note1, this may not be indicative of future results. Liquidity Risks Our primary sources of liquidity consist of existing cash balances, cash flows from our operating activities and availability under our revolving credit facility. Our ability to generate sufficient cash flows from our operating activities is primarily dependent on our sales of converters and power generating products to our customers at margins sufficient to cover fixed and variable expenses. As of December 31, 2022, and 2021, we had cash and cash equivalents of $7,067,247 and $5,174,693, respectively. We believe that our current cash, cash to be generated from our operations and access to loans from our related parties will be sufficient to meet our working capital needs for at least the next twelve months. Although we do not have any amounts committed to be provided by our related parties, due to their relatively small amounts, we do not believe our working capital needs will be negatively impacted without such funds provided by related parties. We are also not dependent upon this offering to meet our liquidity needs for the next twelve months. However, we plan to expand our business to implement our growth strategies in our existing market and strengthen our position in the marketplace. To do so, we will need more capital through equity financing to increase our production and meet market demands. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASU”). Management periodically reviews new accounting standards that are issued. Recently Issued Accounting Standards In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326). The amendments in this update are related to the following two issues: - Issue 1: Troubled Debt Restructurings (“TDRs”) by Creditors The amendments in this Update eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan. - Issue 2: Vintage Disclosures—Gross Writeoffs For public business entities, the amendments in this Update require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. For entities that have adopted the amendments in Update 2016-13, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For entities that have not yet adopted the amendments in Update 2016-13, the effective dates for the amendments in this Update are the same as the effective dates in Update 2016-13. The Company does not expect the adoption to have a material impact on its consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not expected to have a material effect on the Company’s financial position, result of operations or cash flows. |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Prior periods have been reclassified to conform to the current period presentation. The reclassification had no impact on the Consolidated Balance Sheet and Consolidated Statement of Income and Comprehensive Income or Consolidated Statement of Cash Flows. |
Organization and Nature of Op_2
Organization and Nature of Operations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
Schedule of erayak group’s registered agent is harneys fiduciary cayman limited | Entity Name Registered Location Date of Incorporation Ownership as of the issuance date of the report Erayak Power Solution Group Inc. (“Erayak Group”) Cayman Islands June 14, 2019 Parent Erayak Power Solution Limited British Virgin Island June 17, 2019 100% by the Parent Erayak Power Solution Hong Kong Limited (“Erayak HK”) Hong Kong June 26, 2019 100% by Erayak BVI Wenzhou Wenjie Technology Limited (“Wenjie”) Wenzhou, China December 11, 2019 100% by Erayak HK Beijing Leiya Meijia Technology Co., Ltd. (“Meijia”) Beijing, China May 14, 2019 100% by Wenjie Zhejiang Leiya Electronics Limited (“Leiya”) Wenzhou, China March 5, 2009 100% by Wenjie Wenzhou New Focus Limited Wenzhou, China November 21, 2012 100% by Leiya |
Significant Accounting Polici_2
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Nature of Operations [Abstract] | |
Schedule of relevant exchange rates | For the Years Ended December 31 2022 2021 2020 Period Ended RMB: USD exchange rate 6.8972 6.3726 6.5250 Period Average RMB: USD exchange rate 6.7290 6.4508 6.9042 |
Schedule of property, plant, and equipment | Useful lives Buildings 10-20 years Machinery and equipment 5-20 years Transportation vehicles 3-10 years Office equipment 3-10 years Electronic equipment 3-10 years |
Schedule of intangible assets | Useful lives Patents 10 years Trademark 10 years |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable [Abstract] | |
Schedule of accounts receivable | 2022 2021 Accounts receivable $ 9,963,821 $ 1,756,562 Less: allowance for doubtful accounts (2,478 ) (2,682 ) Accounts receivable, net $ 9,961,343 $ 1,753,880 |
Schedule of allowance for doubtful accounts | 2022 2021 Beginning balance $ (2,682 ) $ - Additional reserve through bad debt expense - (2,649 ) Bad debt write-off - - Exchange difference 204 (33 ) Ending balance $ (2,478 ) $ (2,682 ) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventories [Abstract] | |
Schedule of inventories | 2022 2021 Raw materials $ 4,298,235 $ 2,173,972 Work in process 642,235 827,996 Finished goods 1,300,383 948,038 Inventory valuation allowance (13,397 ) (47,939 ) Total $ 6,227,456 $ 3,902,067 |
Advances to Suppliers and Oth_2
Advances to Suppliers and Other (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Advances to Suppliers [Abstract] | |
Schedule of advances to suppliers | 2022 2021 Advance to suppliers $ 515,137 $ 2,112,852 Advance payment for potential land purchase 4,201,354 - Total 4,716,491 2,112,852 |
Schedule of advance to suppliers relating to oversea land purchase | Advance payment for land purchase $ 4,000,000 Advance on refundable consulting fee 200,000 Advance payment for travelling and hotel expenses 1,354 Total $ 4,201,354 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | 2022 2021 Machinery and equipment $ 1,268,443 $ 884,397 Transportation vehicles 230,287 215,653 Electronic devices 69,062 62,497 Office furniture and equipment 577,287 404,557 Leasehold improvements 200,800 - Building 300,223 294,472 Total property plant and equipment, at cost 2,646,102 1,861,576 Less: accumulated depreciation 983,947 781,593 Property, plant and equipment, net $ 1,662,155 $ 1,079,983 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets | 2022 2021 Intangible assets Cost $ 13,136 $ 14,060 Accumulated amortization (2,851 ) (1,709 ) Additions, at cost - 157 Amortization current year (1,471 ) (1,415 ) Intangible assets, net $ 8,814 $ 11,093 |
Schedule of amortization | Year Amortization Net carrying value 2023 $ 1,314 $ 7,500 2024 1,314 6,186 2025 1,314 4,872 2026 1,314 3,558 2027 1,314 2,244 |
Short-Term Borrowings (Tables)
Short-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Short-Term Borrowings [Abstract] | |
Schedule of short-term borrowings from financial institutions | As of 2022 2021 Short-term borrowing from financial institutions $ 4,777,301 $ 4,078,425 Short-term borrowing from third-party individual - 108,503 Government loan 1,449,864 1,569,218 Total $ 6,227,165 $ 5,756,146 |
Schedule of short-term borrowings from financial institutions | Bank Name Amount – RMB Amount – USD Issuance Date Expiration Date Interest Longwan Rural Commercial Bank 1,200,000 173,984 2022.06.15 2023.06.14 9.60 % Longwan Rural Commercial Bank 1,750,000 253,725 2022.06.15 2023.06.14 9.60 % Minsheng Bank 10,000,000 1,449,864 2022.08.02 2023.02.02 4.10 % Minsheng Bank 10,000,000 1,449,864 2022.08.09 2023.08.09 4.10 % Minsheng Bank 10,000,000 1,449,864 2022.08.16 2023.08.15 4.10 % Total RMB 32,950,000 $ 4,777,301 Bank Name Amount – RMB Amount – USD Issuance Date Expiration Date Interest Longwan Rural Commercial Bank 1,750,000 $ 274,622 2021.07.06 2022.07.05 10.00 % Longwan Rural Commercial Bank 1,200,000 188,312 2021.07.06 2022.07.05 9.61 % Minsheng Bank 6,500,000 1,020,023 2021.04.16 2022.04.15 4.35 % Minsheng Bank 13,500,000 2,118,509 2021.04.12 2022.04.08 4.30 % WeBank Shenzhen 1,510,000 236,959 2021.12.24 2021.12.31 7.92 % Bank of Ningbo 650,321 102,000 2021.12.01 2022.02.28 4.30 % Bank of Ningbo 605,692 95,000 2021.12.01 2022.02.28 3.01 % Bank of Ningbo 229,525 36,000 2021.12.01 2022.02.28 4.30 % Bank of Ningbo 44,630 7,000 2021.12.01 2022.02.28 4.30 % Total RMB 25,990,168 $ 4,078,425 |
Long-Term Loan (Tables)
Long-Term Loan (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Borrowings [Abstract] | |
Schedule of long term loan | Description Amount – RMB Amount – USD Issuance Date Expiration Date Interest WeBank Shenzhen 500,000 72,493 2022.10.06 2024.09.23 7.27 % WeBank Shenzhen 400,120 58,012 2022.10.23 2024.10.23 6.55 % WeBank Shenzhen 600,180 87,018 2022.12.30 2024.12.23 7.13 % Minsheng Bank 30,000,000 4,349,591 2021.04.12 2023.04.08 4.70 % Subtotal 31,500,300 4,567,114 Current portion of long-term loans (30,000,000 ) (4,349,591 ) Total RMB 1,500,300 $ 217,523 |
Sales (Tables)
Sales (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Sales [Abstract] | |
Schedule of disaggregated sales | 2022 2021 2020 Inverters $ 14,065,166 $ 15,356,847 $ 12,751,905 Chargers 582,040 1,400,506 745,955 Gasoline generators 11,790,582 1,542,670 446,292 Other products 471,237 328,863 177,686 Total $ 26,909,025 $ 18,628,886 $ 14,121,838 |
General and Administrative Ex_2
General and Administrative Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
General and Administrative Expenses [Abstract] | |
Schedule of general and administrative expenses | 2022 2021 2020 Employee compensation and benefits $ 312,479 323,325 $ 200,040 Travel and communication expenses 34,267 33,068 38,629 Rent and utilities 58,466 70,178 35,094 Consulting fees 310,039 53,169 157,234 Insurance 13,165 16,699 - Depreciation and amortization expenses 60,698 55,042 44,443 Sales tax 80,595 82,052 46,569 Entertainment 17,193 5,193 14,703 Office and miscellaneous 42,598 51,893 7,917 Total $ 929,500 690,619 $ 544,629 |
Selling and Marketing Expenses
Selling and Marketing Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Selling and Marketing Expenses [Abstract] | |
Schedule of selling and marketing expenses | 2022 2021 2020 Employee compensation and benefits $ 141,600 $ 99,797 $ 106,623 Travel and promotion 36,768 45,083 47,199 Transportation 181,556 78,281 47,886 Insurance - 2,813 2,561 Consulting fee 6,917 6,203 - Inspection and certification fees 196,732 77,352 108,062 Entertainment 140,292 166,295 - Office and miscellaneous 16,255 30,481 12,978 Total $ 720,120 $ 506,305 $ 325,309 |
Research and Development Expe_2
Research and Development Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Research and Development Expenses [Abstract] | |
Schedule of research and development expenses | 2022 2021 2020 Salaries $ 427,525 $ 347,434 $ 224,691 Contract services and supplies 409,149 541,055 303,494 Utility 2,025 1,777 775 Design cost 46,651 - - Depreciation 22,499 39,365 46,710 Other 24,419 57,254 29,445 Total $ 932,268 $ 986,885 $ 605,115 |
Interest Expenses, Net (Tables)
Interest Expenses, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Interest Expenses, Net [Abstract] | |
Schedule of interest expenses | 2022 2021 2020 Interest expense $ 499,746 $ 451,689 $ 261,899 Interest income (26,658 ) (34,041 ) (15,936 ) Total interest expense, net $ 473,088 $ 417,648 $ 245,963 |
Rental Income, Net (Tables)
Rental Income, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Rental Income, Net [Abstract] | |
Schedule of leased assets on a straight-line basis | 2022 2021 2020 Rental income $ 388,058 416,692 $ 325,839 Rental expense (289,342 ) (300,499 ) (3,419 ) Total rental income, net $ 98,716 116,193 $ 322,420 |
Other Income, Net (Tables)
Other Income, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Schedule of other income | 2022 2021 2020 Government grant $ 194,001 $ 169,827 $ 220,245 Inspection and certification reimbursement - 328,589 - Sampling reimbursement - 26,462 - Exchange gains (losses) 31,749 3,686 (5,481 ) Bank charges (11,397 ) (11,906 ) (11,156 ) Miscellaneous income 10,762 10,019 15,003 Miscellaneous expenses (5,585 ) (14,265 ) (4,646 ) Total other income, net $ 219,530 512,412 $ 213,965 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of nature of relationships | Name Relationship with the Company Wenzhou Ailefu Technology Co. Ltd. (“Ailefu”) An entity 100% owned by Xiangze Hangzhou Xiangze Trading Co. Ltd. (“Xiangze”) An entity 100% owned by Lingyi Kong Wenzhou Weidi Technology Co. Ltd. (“Weidi”) An entity 100% owned by Chuanlong Lin’s wife Shanghai Fushishenye Mechanical and Electrical Equipment Co. Ltd. (“Fushishenye”) An entity with Lingyi Kong as legal rep Ruian Xiaobai New Energy Automobile Rental Co. Ltd. (“Xiaobai”) An entity 30% owned by Shengling Xiang Chuanlong Lin Relative of Lingyi Kong; former controlling shareholder of New Focus Shengling Xiang Executive and legal rep of the Company Lingyi Kong Controlling shareholder of the Company Chunhua Xiang Relative of Lingyi Kong |
Schedule of net outstanding balances with related parties | Accounts Name of related parties 2022 2021 Due to related party Lingyi Kong (344,528 ) (158,198 ) Shengling Xiang (46,623 ) - Net due to related parties $ (391,151 ) $ (158,198 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of consolidated statements of income and comprehensive income | 2022 2021 2020 Income before taxes excluded the amounts of loss incurring entities $ 3,887,240 $ 3,786,691 $ 2,636,948 PRC EIT tax rates 15 % 15 % 15 % Tax at the PRC EIT tax rates $ 583,086 $ 568,005 395,542 Tax effect of R&D expenses deduction (139,840 ) (148,033 ) (67,793 ) Tax effect of accumulated loss (18,166 ) (23,132 ) (4,835 ) Tax effect of non-deductible expenses 12,692 11,424 62,827 Tax refund from prior years - (106,348 ) - Income tax expenses $ 437,771 $ 301,916 $ 385,741 |
Schedule of Income taxes | 2022 2021 2020 Current income tax $ 437,771 $ 332,549 $ 386,389 Deferred income tax - (30,633 ) (648 ) Total income tax expense $ 437,771 $ 301,916 $ 385,741 |
Schedule of deferred tax assets and deferred tax liabilities | As of December 31, 2022 2021 2020 Deferred tax assets: Opening balance $ (36,247 ) $ (5,116 ) $ (4,153 ) Accumulated loss - (23,132 ) (648 ) Bad debt - (397 ) - Obsolete inventory - (7,104 ) - Effect of exchange rate 2,757 (498 ) (315 ) Total $ (33,490 ) $ (36,247 ) $ (5,116 ) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of revenue by international markets | December 31, 2022 Top Five International Markets: Sales As % China $ 18,033,220 67.02 % Poland 1,607,394 5.97 % Germany 1,217,732 4.53 % Canada 971,909 3.61 % U.K. 879,733 3.27 % December 31, 2021 Top Five International Markets: Sales As % China $ 10,638,503 57.11 % France 1,202,988 6.46 % Poland 1,129,165 6.06 % Mexico 1,071,869 5.75 % U.K. 790,326 4.24 % December 31, 2020 Top Five International Markets: Sales As % China $ 9,558,270 67.68 % France 886,074 6.27 % Poland 555,097 3.93 % Germany 465,042 3.29 % Mexico 309,180 2.19 % |
Condensed Financial Informati_2
Condensed Financial Information of the Parent Company (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information of the Parent Company (Tables) [Line Items] | |
Schedule of parent company balance sheets | December 31, December 31, ASSETS Current assets Cash 6,417,339 - Advances to suppliers and other 4,201,354 - Non-current assets Investment in subsidiaries $ 8,726,358 $ 6,894,322 Total assets $ 19,345,051 $ 6,894,322 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES $ 1,000 $ - COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY Class A shares, 450,000,000 shares authorized; 11,000,000 shares issued and outstanding as of December 31, 2022; 8,000,000 shares issued and outstanding as of December 31, 2021 1,100 800 Class B shares, 50,000,000 shares authorized; 1,000,000 shares issued and outstanding as of December 31, 2022 and 2021 100 100 Additional paid-in capital 10,645,122 1,060,510 Retained earnings 9,081,671 5,605,710 Accumulated other comprehensive (loss) gain (383,942 ) 227,202 Total shareholders’ equity 19,344,051 6,894,322 Total liabilities and shareholders’ equity $ 19,345,051 $ 6,894, 322 |
Schedule of parent company statements of comprehensive income | 2022 2021 2020 Income before taxes excluded the amounts of loss incurring entities $ 3,887,240 $ 3,786,691 $ 2,636,948 PRC EIT tax rates 15 % 15 % 15 % Tax at the PRC EIT tax rates $ 583,086 $ 568,005 395,542 Tax effect of R&D expenses deduction (139,840 ) (148,033 ) (67,793 ) Tax effect of accumulated loss (18,166 ) (23,132 ) (4,835 ) Tax effect of non-deductible expenses 12,692 11,424 62,827 Tax refund from prior years - (106,348 ) - Income tax expenses $ 437,771 $ 301,916 $ 385,741 |
Schedule of parent company statements of cash flows | For the Years Ended December 31, 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,475,961 $ 3,394,649 $ 2,213,372 Adjustments to reconcile net cash flows from operating activities: Equity in earnings of subsidiaries (3,475,111 ) (3,394,649 ) (2,213,372 ) Changes in operating assets and liabilities: Other current liabilities (1,000 ) - - Net cash used in operating activities (150 ) - - CASH FLOW FROM INVESTING ACTIVITIES Advance for potential land purchase (4,201,354 ) - - Net cash used in investing activities (4,201,354 ) - - CASH FLOW FROM FINANCING ACTIVITIES Proceeds from IPO 10,080,231 - - Net cash provided in financing activities 10,080,231 - - EFFECT OF FOREIGN EXCHANGE 538,612 CHANGES IN CASH AND RESTRICTED CASH 6,417,339 - - CASH AND RESTRICTED CASH, beginning of year - - - CASH AND RESTRICTED CASH, end of year $ 6,417,339 $ - - |
Parent Company [Member] | |
Condensed Financial Information of the Parent Company (Tables) [Line Items] | |
Schedule of parent company statements of comprehensive income | For the Years Ended 2022 2021 2020 EQUITY IN EARNINGS OF SUBSIDIARIES $ 3,475,961 $ 3,394,649 $ 2,213,372 NET INCOME 3,475,961 3,394,649 2,213,372 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (611,144 ) 122,397 193,531 COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $ 2,864,817 $ 3,517,046 $ 2,406,903 |
Organization and Nature of Op_3
Organization and Nature of Operations (Details) | 1 Months Ended | |||||||
Aug. 12, 2020 | Apr. 12, 2020 | Jan. 14, 2020 | Jun. 17, 2019 $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2021 shares | Jun. 14, 2019 $ / shares shares | |
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares authorized | 500,000,000 | 500,000,000 | ||||||
Ordinary shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||
Paid in capital | ¥ | ¥ 5,000,000 | |||||||
Reorganization equity, percentage | 10% | |||||||
Reorganization, description | Wenjie acquired 90% equity of Leiya from Shengling Xiang, and 10% from Hecang Limited. As a result, Leiya’s equity interest is 100% held by Wenjie as of April 21, 2020. | Chuanlong Lin transferred 100% equity of New Focus to Leiya. Therefore, Leiya holds 100% of equity interest of New Focus as of August 12, 2020. | ||||||
Class A Ordinary Shares [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares authorized | 450,000,000 | 450,000,000 | 450,000,000 | |||||
Ordinary shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||
Ordinary shares issued | 11,000,000 | 11,000,000 | 8,000,000 | |||||
Common shares outstanding | 11,000,000 | 11,000,000 | 8,000,000 | |||||
Class B Ordinary Shares [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | |||||
Ordinary shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||
Ordinary shares issued | 1,000,000 | 1,000,000 | 1,000,000 | |||||
Common shares outstanding | 1,000,000 | 1,000,000 | 1,000,000 | |||||
Erayak International Limited [Member] | Class A Ordinary Shares [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares owned | 6,000,000 | |||||||
Erayak International Limited [Member] | Class B Ordinary Shares [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares owned | 1,000,000 | |||||||
CEC Science and Innovation Co., Ltd. [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares owned | 1,400,000 | |||||||
Grand Merchant Incorporation Limited. [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares owned | 600,000 | |||||||
Erayak BVI [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares authorized | 50,000 | |||||||
Ordinary shares, par value (in Dollars per share) | $ / shares | $ 1 | |||||||
Ordinary shares issued | 100 | |||||||
Common shares outstanding | 100 | |||||||
Percentage of owned shares | 100% | |||||||
Erayak HK [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Paid in capital | $ | $ 0 | |||||||
Wenjie [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Paid in capital | $ | 0 | |||||||
Registered capital (in Yuan Renminbi) | ¥ | ¥ 5,000,000 | |||||||
Meijia [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Paid in capital | $ | $ 0 | |||||||
Registered capital (in Yuan Renminbi) | ¥ | 100,000 | |||||||
Leiya [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Paid in capital | ¥ | 6,900,000 | |||||||
Registered capital (in Yuan Renminbi) | ¥ | 50,000,000 | |||||||
New Focus [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Registered capital (in Yuan Renminbi) | ¥ | ¥ 30,000,000 | |||||||
Erayak Group [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares authorized | 500,000,000 | |||||||
Ordinary shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||
Erayak Group [Member] | Class A Ordinary Shares [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares authorized | 450,000,000 | |||||||
Ordinary shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||
Ordinary shares issued | 11,000,000 | |||||||
Common shares outstanding | 1,400,000 | |||||||
Erayak Group [Member] | Class B Ordinary Shares [Member] | ||||||||
Organization and Nature of Operations (Details) [Line Items] | ||||||||
Ordinary shares authorized | 50,000,000 | |||||||
Ordinary shares, par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||
Ordinary shares issued | 1,000,000 | |||||||
Common shares outstanding | 1,000,000 |
Organization and Nature of Op_4
Organization and Nature of Operations (Details) - Schedule of erayak group’s registered agent is harneys fiduciary cayman limited | 12 Months Ended |
Dec. 31, 2022 | |
Erayak Power Solution Group Inc. (“Erayak Group”) [Member] | |
Variable Interest Entity [Line Items] | |
Registered Location | Cayman Islands |
Date of Incorporation | Jun. 14, 2019 |
Ownership as of the issuance date of the report | Parent |
Erayak Power Solution Limited (“Erayak BVI’) [Member] | |
Variable Interest Entity [Line Items] | |
Registered Location | British Virgin Island |
Date of Incorporation | Jun. 17, 2019 |
Ownership as of the issuance date of the report | 100% by the Parent |
Erayak Power Solution Hong Kong Limited (“Erayak HK”) [Member] | |
Variable Interest Entity [Line Items] | |
Registered Location | Hong Kong |
Date of Incorporation | Jun. 26, 2019 |
Ownership as of the issuance date of the report | 100% by Erayak BVI |
Wenzhou Wenjie Technology Limited (“Wenjie”) [Member] | |
Variable Interest Entity [Line Items] | |
Registered Location | Wenzhou, China |
Date of Incorporation | Dec. 11, 2019 |
Ownership as of the issuance date of the report | 100% by Erayak HK |
Beijing Leiya Meijia Technology Co., Ltd. (“Meijia”) [Member] | |
Variable Interest Entity [Line Items] | |
Registered Location | Beijing, China |
Date of Incorporation | May 14, 2019 |
Ownership as of the issuance date of the report | 100% by Wenjie |
Zhejiang Leiya Electronics Limited (Leiya) [Member] | |
Variable Interest Entity [Line Items] | |
Registered Location | Wenzhou, China |
Date of Incorporation | Mar. 05, 2009 |
Ownership as of the issuance date of the report | 100% by Wenjie |
Wenzhou New Focus Limited (“New Focus”) [Member] | |
Variable Interest Entity [Line Items] | |
Registered Location | Wenzhou, China |
Date of Incorporation | Nov. 21, 2012 |
Ownership as of the issuance date of the report | 100% by Leiya |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization and Nature of Operations [Abstract] | |||
Cash flow from operating activities | $ (4,151,135) | $ 4,642,892 | $ (7,926,491) |
Working capital | 10,192,102 | ||
Restricted cash | $ 34,728 | ||
Residual value | 5% | ||
VAT Description | The Company is subject to a VAT rate of 17% before May 1, 2018, 16% on and after May 1, 2018, and a new VAT rate of 13% effective on April 1, 2019. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. | ||
Payment terms | 1 year | ||
Grants received | $ 194,001 | 169,827 | 220,245 |
Shipping and handling costs | 181,556 | 78,281 | 24,231 |
Advertising costs | $ 8,513 | 5,873 | 11,724 |
Tax benefit | 50% | ||
PRC tax authorities term | 5 years | ||
Cash and cash equivalents | $ 7,067,247 | $ 5,174,693 | $ 4,062,055 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - Schedule of relevant exchange rates | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of Relevant Exchange Rates [Abstract] | |||
Period Ended RMB: USD exchange rate | 6.8972 | 6.3726 | 6.525 |
Period Average RMB: USD exchange rate | 6.729 | 6.4508 | 6.9042 |
Significant Accounting Polici_5
Significant Accounting Policies (Details) - Schedule of property, plant, and equipment | 12 Months Ended |
Dec. 31, 2022 | |
Building [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Building [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 20 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 20 years |
Transportation Vehicles [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Transportation Vehicles [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Office Equipment [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Office Equipment [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Equipment [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Equipment [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Significant Accounting Polici_6
Significant Accounting Policies (Details) - Schedule of intangible assets | 12 Months Ended |
Dec. 31, 2022 | |
Patents [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful lives | 10 years |
Trademarks [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Useful lives | 10 years |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts Receivable [Abstract] | |||
Bad debt expense | $ 0 | $ 2,682 | $ 0 |
Accounts Receivable (Details) -
Accounts Receivable (Details) - Schedule of accounts receivable - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Accounts Receivable [Abstract] | ||
Accounts receivable | $ 9,963,821 | $ 1,756,562 |
Less: allowance for doubtful accounts | (2,478) | (2,682) |
Accounts receivable, net | $ 9,961,343 | $ 1,753,880 |
Accounts Receivable (Details)_2
Accounts Receivable (Details) - Schedule of allowance for doubtful accounts - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Allowance for Doubtful Accounts [Abstract] | ||
Beginning balance | $ (2,682) | |
Additional reserve through bad debt expense | (2,649) | |
Bad debt write-off | ||
Exchange difference | 204 | (33) |
Ending balance | $ (2,478) | $ (2,682) |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventories [Abstract] | ||
Inventory valuation allowance | $ 31,668 | $ 47,358 |
Inventories (Details) - Schedul
Inventories (Details) - Schedule of inventories - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory [Line Items] | ||
Raw materials | $ 4,298,235 | $ 2,173,972 |
Work in process | 642,235 | 827,996 |
Finished goods | 1,300,383 | 948,038 |
Inventory valuation allowance | (13,397) | (47,939) |
Total | $ 6,227,456 | $ 3,902,067 |
Advances to Suppliers and Oth_3
Advances to Suppliers and Other (Details) - USD ($) | 12 Months Ended | ||
May 05, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Advances to Suppliers and Other (Details) [Line Items] | |||
Suppliers amount | $ 4,716,491 | $ 2,112,852 | |
Advanced received | 4,201,354 | ||
Subsequent Event [Member] | |||
Advances to Suppliers and Other (Details) [Line Items] | |||
Advanced received | $ 4,000,000 | ||
Suppliers [Member] | |||
Advances to Suppliers and Other (Details) [Line Items] | |||
Suppliers amount | $ 4,201,354 |
Advances to Suppliers and Oth_4
Advances to Suppliers and Other (Details) - Schedule of advances to suppliers - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Advances To Suppliers Abstract | ||
Advance to suppliers | $ 515,137 | $ 2,112,852 |
Advance payment for potential land purchase | 4,201,354 | |
Total | $ 4,716,491 | $ 2,112,852 |
Advances to Suppliers and Oth_5
Advances to Suppliers and Other (Details) - Schedule of advance to suppliers relating to oversea land purchase | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Schedule of advance to suppliers relating to oversea land purchase [Abstract] | |
Advance payment for land purchase | $ 4,000,000 |
Advance on refundable consulting fee | 200,000 |
Advance payment for travelling and hotel expenses | 1,354 |
Total | $ 4,201,354 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Property and equipment | $ 926,117 | $ 323,287 | |
Disposals | 0 | 0 | |
Depreciation expenses | 268,346 | 215,121 | $ 148,194 |
Cost, Depreciation | $ 184,542 | $ 121,455 | $ 57,041 |
Property, Plant and Equipment_3
Property, Plant and Equipment (Details) - Schedule of property, plant and equipment - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Property, Plant and Equipment [Abstract] | ||
Total property plant and equipment, at cost | $ 2,646,102 | $ 1,861,576 |
Less: accumulated depreciation | 983,947 | 781,593 |
Property, plant and equipment, net | 1,662,155 | 1,079,983 |
Machinery and equipment [Member] | ||
Schedule of Property, Plant and Equipment [Abstract] | ||
Total property plant and equipment, at cost | 1,268,443 | 884,397 |
Transportation vehicles [Member] | ||
Schedule of Property, Plant and Equipment [Abstract] | ||
Total property plant and equipment, at cost | 230,287 | 215,653 |
Electronic devices [Member] | ||
Schedule of Property, Plant and Equipment [Abstract] | ||
Total property plant and equipment, at cost | 69,062 | 62,497 |
Office furniture and equipment [Member] | ||
Schedule of Property, Plant and Equipment [Abstract] | ||
Total property plant and equipment, at cost | 577,287 | 404,557 |
Leasehold Improvements [Member] | ||
Schedule of Property, Plant and Equipment [Abstract] | ||
Total property plant and equipment, at cost | 200,800 | |
Building [Member] | ||
Schedule of Property, Plant and Equipment [Abstract] | ||
Total property plant and equipment, at cost | $ 300,223 | $ 294,472 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible assets | ||
Cost | $ 13,136 | $ 14,060 |
Accumulated amortization | (2,851) | (1,709) |
Additions, at cost | 157 | |
Amortization current year | (1,471) | (1,415) |
Intangible assets, net | $ 8,814 | $ 11,093 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of amortization - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Amortization [Abstract] | ||
2023 | $ 1,314 | $ 7,500 |
2024 | 1,314 | 6,186 |
2025 | 1,314 | 4,872 |
2026 | 1,314 | 3,558 |
2027 | $ 1,314 | $ 2,244 |
Leases (Details)
Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Term lease payment | 20 years | |
Right of use assets | $ 7,665,013 | $ 8,849,073 |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Short-Term Borrowings [Abstract] | |||
Interest expenses on short term borrowings | $ 192,198 | $ 139,764 | $ 91,529 |
Government loan | 54,614 | ||
Imputed interest expenses | $ 10,538 | $ 59,657 |
Short-Term Borrowings (Detail_2
Short-Term Borrowings (Details) - Schedule of short-term borrowings - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of short-term borrowings [Abstract] | ||
Short-term borrowings from financial institutions | $ 4,777,301 | $ 4,078,425 |
Short-term borrowing from third-party individual | 108,503 | |
Government loan | 1,449,864 | 1,569,218 |
Total | $ 6,227,165 | $ 5,756,146 |
Short-Term Borrowings (Detail_3
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 4,777,301 | $ 4,078,425 | ¥ 32,950,000 | ¥ 25,990,168 |
Longwan Rural Commercial Bank [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 173,984 | $ 188,312 | 1,200,000 | 1,200,000 |
Issuance Date | Jun. 15, 2022 | Jul. 06, 2021 | ||
Expiration Date | Jun. 14, 2023 | Jul. 05, 2022 | ||
Interest | 9.60% | 9.61% | ||
Zhejiang Chouzhou Commercial Bank [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 253,725 | 1,750,000 | ||
Issuance Date | Jun. 15, 2022 | |||
Expiration Date | Jun. 14, 2023 | |||
Interest | 9.60% | |||
Minsheng Bank [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 1,449,864 | $ 1,020,023 | 10,000,000 | 6,500,000 |
Issuance Date | Aug. 02, 2022 | Apr. 16, 2021 | ||
Expiration Date | Feb. 02, 2023 | Apr. 15, 2022 | ||
Interest | 4.10% | 4.35% | ||
Minsheng Bank [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 1,449,864 | 10,000,000 | ||
Issuance Date | Aug. 09, 2022 | |||
Expiration Date | Aug. 09, 2023 | |||
Interest | 4.10% | |||
Minsheng Bank [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 1,449,864 | ¥ 10,000,000 | ||
Issuance Date | Aug. 16, 2022 | |||
Expiration Date | Aug. 15, 2023 | |||
Interest | 4.10% | |||
Longwan Rural Commercial Bank [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 274,622 | 1,750,000 | ||
Issuance Date | Jul. 06, 2021 | |||
Expiration Date | Jul. 05, 2022 | |||
Interest | 10% | |||
Minsheng Bank [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 2,118,509 | 13,500,000 | ||
Issuance Date | Apr. 12, 2021 | |||
Expiration Date | Apr. 08, 2022 | |||
Interest | 4.30% | |||
WeBank Shenzhen [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 236,959 | 1,510,000 | ||
Issuance Date | Dec. 24, 2021 | |||
Expiration Date | Dec. 31, 2021 | |||
Interest | 7.92% | |||
Bank of Ningbo [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 102,000 | 650,321 | ||
Issuance Date | Dec. 01, 2021 | |||
Expiration Date | Feb. 28, 2022 | |||
Interest | 4.30% | |||
Bank of Ningbo [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 95,000 | 605,692 | ||
Issuance Date | Dec. 01, 2021 | |||
Expiration Date | Feb. 28, 2022 | |||
Interest | 3.01% | |||
Bank of Ningbo [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 36,000 | 229,525 | ||
Issuance Date | Dec. 01, 2021 | |||
Expiration Date | Feb. 28, 2022 | |||
Interest | 4.30% | |||
Bank of Ningbo [Member] | ||||
Short-Term Borrowings (Details) - Schedule of short-term borrowings from financial institutions [Line Items] | ||||
Bank Name | $ 7,000 | ¥ 44,630 | ||
Issuance Date | Dec. 01, 2021 | |||
Expiration Date | Feb. 28, 2022 | |||
Interest | 4.30% |
Long-Term Loan (Details)
Long-Term Loan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Long-Term Borrowings [Abstract] | ||
Long-term loan | $ 4,707,655 | |
Interest expense on long-term loan | $ 212,451 | $ 153,611 |
Long-Term Loan (Details) - Sche
Long-Term Loan (Details) - Schedule of long term loan | 12 Months Ended | |
Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | |
Debt Instrument [Line Items] | ||
Long-Term Loan | $ 4,567,114 | ¥ 31,500,300 |
Current portion of long-term loans | (4,349,591) | (30,000,000) |
Total | 217,523 | 1,500,300 |
WeBank Shenzhen [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Loan | $ 72,493 | ¥ 500,000 |
Long-Term Loan Issuance Date | Oct. 06, 2022 | |
Long-Term Loan Issuance Date | Sep. 23, 2024 | |
Long-Term Loan Interest | 7.27% | 7.27% |
WeBank Shenzhen [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Loan | $ 58,012 | ¥ 400,120 |
Long-Term Loan Issuance Date | Oct. 23, 2022 | |
Long-Term Loan Issuance Date | Oct. 23, 2024 | |
Long-Term Loan Interest | 6.55% | 6.55% |
WeBank Shenzhen [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Loan | $ 87,018 | ¥ 600,180 |
Long-Term Loan Issuance Date | Dec. 30, 2022 | |
Long-Term Loan Issuance Date | Dec. 23, 2024 | |
Long-Term Loan Interest | 7.13% | 7.13% |
Minsheng Bank [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Loan | $ 4,349,591 | ¥ 30,000,000 |
Long-Term Loan Issuance Date | Apr. 12, 2021 | |
Long-Term Loan Issuance Date | Apr. 08, 2023 | |
Long-Term Loan Interest | 4.70% | 4.70% |
Sales (Details) - Schedule of d
Sales (Details) - Schedule of disaggregated sales - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||
Disaggregated sales | $ 26,909,025 | $ 18,628,886 | $ 14,121,838 |
Disaggregated sales [Member] | |||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||
Disaggregated sales | 14,065,166 | 15,356,847 | 12,751,905 |
Disaggregated sales [Member] | |||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||
Disaggregated sales | 582,040 | 1,400,506 | 745,955 |
Disaggregated sales [Member] | |||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||
Disaggregated sales | 11,790,582 | 1,542,670 | 446,292 |
Disaggregated sales [Member] | |||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||
Disaggregated sales | $ 471,237 | $ 328,863 | $ 177,686 |
General and Administrative Ex_3
General and Administrative Expenses (Details) - Schedule of general and administrative expenses - General and Administrative Expense [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
General and Administrative Expenses (Details) - Schedule of general and administrative expenses [Line Items] | |||
Employee compensation and benefits | $ 312,479 | $ 323,325 | $ 200,040 |
Travel and communication expenses | 34,267 | 33,068 | 38,629 |
Rent and utilities | 58,466 | 70,178 | 35,094 |
Consulting fees | 310,039 | 53,169 | 157,234 |
Insurance | 13,165 | 16,699 | |
Depreciation and amortization expenses | 60,698 | 55,042 | 44,443 |
Sales tax | 80,595 | 82,052 | 46,569 |
Entertainment | 17,193 | 5,193 | 14,703 |
Office and miscellaneous | 42,598 | 51,893 | 7,917 |
Total | $ 929,500 | $ 690,619 | $ 544,629 |
Selling and Marketing Expense_2
Selling and Marketing Expenses (Details) - Schedule of selling and marketing expenses - Selling and Marketing Expense [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Selling and Marketing Expenses (Details) - Schedule of selling and marketing expenses [Line Items] | |||
Employee compensation and benefits | $ 141,600 | $ 99,797 | $ 106,623 |
Travel and promotion | 36,768 | 45,083 | 47,199 |
Transportation | 181,556 | 78,281 | 47,886 |
Insurance | 2,813 | 2,561 | |
Consulting fee | 6,917 | 6,203 | |
Inspection and certification fees | 196,732 | 77,352 | 108,062 |
Entertainment | 140,292 | 166,295 | |
Office and miscellaneous | 16,255 | 30,481 | 12,978 |
Total | $ 720,120 | $ 506,305 | $ 325,309 |
Research and Development Expe_3
Research and Development Expenses (Details) - Schedule of research and development expenses - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule Of Research And Development Expenses Abstract | |||
Salaries | $ 427,525 | $ 347,434 | $ 224,691 |
Contract services and supplies | 409,149 | 541,055 | 303,494 |
Utility | 2,025 | 1,777 | 775 |
Design cost | 46,651 | ||
Depreciation | 22,499 | 39,365 | 46,710 |
Other | 24,419 | 57,254 | 29,445 |
Total | $ 932,268 | $ 986,885 | $ 605,115 |
Interest Expenses, Net (Details
Interest Expenses, Net (Details) - Schedule of interest expenses - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Interest Expenses [Abstract] | |||
Interest expense | $ 499,746 | $ 451,689 | $ 261,899 |
Interest income | (26,658) | (34,041) | (15,936) |
Total interest expense, net | $ 473,088 | $ 417,648 | $ 245,963 |
Rental Income, Net (Details) -
Rental Income, Net (Details) - Schedule of leased assets on a straight-line basis - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Leased Assets on a Straight Line Basis [Abstract] | |||
Rental income | $ 388,058 | $ 416,692 | $ 325,839 |
Rental expense | (289,342) | (300,499) | (3,419) |
Total rental income, net | $ 98,716 | $ 116,193 | $ 322,420 |
Other Income, Net (Details) - S
Other Income, Net (Details) - Schedule of other income - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | $ 219,530 | $ 512,412 | $ 213,965 |
Government grant [Member] | |||
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | 194,001 | 169,827 | 220,245 |
Inspection and certification reimbursement [Member] | |||
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | 328,589 | ||
Sampling reimbursement [Member] | |||
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | 26,462 | ||
Exchange gains (losses) [Member] | |||
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | 31,749 | 3,686 | (5,481) |
Bank charges [Member] | |||
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | (11,397) | (11,906) | (11,156) |
Miscellaneous income [Member] | |||
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | 10,762 | 10,019 | 15,003 |
Miscellaneous expenses [Member] | |||
Other Income, Net (Details) - Schedule of other income [Line Items] | |||
Other income, net | $ (5,585) | $ (14,265) | $ (4,646) |
Customer and Supplier Concent_2
Customer and Supplier Concentrations (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Customer and Supplier Concentrations (Details) [Line Items] | |||
Description of risk factors | Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases. | ||
Concentration risk, percentage | 10% | ||
Total revenues, percentage | 16% | ||
Accounts receivable (in Dollars) | $ 46,633 | $ 3,198,122 | |
Total accounts receivable percentage | 63% | ||
One Customer [Member] | |||
Customer and Supplier Concentrations (Details) [Line Items] | |||
Total revenues, percentage | 14.67% | 16% | |
Accounts receivable (in Dollars) | $ 2,178,000 | ||
Total accounts receivable percentage | 21.86% | 49.60% | |
Accounts receivable percentage | 18.08% | ||
Two Customer [Member] | |||
Customer and Supplier Concentrations (Details) [Line Items] | |||
Total revenues, percentage | 10.82% | 11% | 15% |
Accounts receivable (in Dollars) | $ 636,639 | ||
Total accounts receivable percentage | 6.39% | 2.65% | |
Accounts receivable percentage | 15.85% | ||
Three Customer [Member] | |||
Customer and Supplier Concentrations (Details) [Line Items] | |||
Total revenues, percentage | 10% | ||
Accounts receivable percentage | 11.58% | ||
Four Customers [Member] | |||
Customer and Supplier Concentrations (Details) [Line Items] | |||
Accounts receivable percentage | 10.24% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transactions (Details) [Line Items] | ||
Accounts payable | $ 2,844,019 | $ 5,043,783 |
Working capital | 22,696,628 | 14,344,678 |
Lingyi Kong [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Outstanding payable due | 344,528 | 158,198 |
Shengling Xiang [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Outstanding payable due | 46,623 | 0 |
Working capital | 483,498 | 27,177 |
Chuanlong Lin [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Working capital | 0 | 11,130 |
Chunhua Xiang [Member] | ||
Related Party Transactions (Details) [Line Items] | ||
Working capital | $ 780,131 | $ 928,439 |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of nature of relationships | 12 Months Ended |
Dec. 31, 2022 | |
Wenzhou Ailefu Technology Co. Ltd. (“Ailefu”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | An entity 100% owned by Xiangze |
Hangzhou Xiangze Trading Co. Ltd. (“Xiangze”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | An entity 100% owned by Lingyi Kong |
Wenzhou Weidi Technology Co. Ltd. (“Weidi”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | An entity 100% owned by Chuanlong Lin’s wife |
Shanghai Fushishenye Mechanical and Electrical Equipment Co. Ltd. (“Fushishenye”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | An entity with Lingyi Kong as legal rep |
Ruian Xiaobai New Energy Automobile Rental Co. Ltd. (“Xiaobai”) [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | An entity 30% owned by Shengling Xiang |
Chuanlong Lin [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | Relative of Lingyi Kong; former controlling shareholder of New Focus |
Shengling Xiang [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | Executive and legal rep of the Company |
Lingyi Kong [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | Controlling shareholder of the Company |
Chunhua Xiang [Member] | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Relationship with the Company | Relative of Lingyi Kong |
Related Party Transactions (D_3
Related Party Transactions (Details) - Schedule of net outstanding balances with related parties - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transactions (Details) - Schedule of net outstanding balances with related parties [Line Items] | ||
Net due to related parties | $ (391,151) | $ (158,198) |
Lingyi Kong [Member] | ||
Related Party Transactions (Details) - Schedule of net outstanding balances with related parties [Line Items] | ||
Due to related party | (344,528) | (158,198) |
Shengling Xiang [Member] | ||
Related Party Transactions (Details) - Schedule of net outstanding balances with related parties [Line Items] | ||
Due to related party | $ (46,623) |
Shareholders_ Equity (Details)
Shareholders’ Equity (Details) - USD ($) | 12 Months Ended | ||
Dec. 14, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Shareholders’ Equity (Details) [Line Items] | |||
Ordinary shares authorized | 500,000,000 | ||
Ordinary shares par value (in Dollars per share) | $ 0.0001 | ||
Additional paid in capital (in Dollars) | $ 10,645,122 | $ 1,060,510 | |
Net income tax rate | 10% | ||
Capital reserve | 50% | ||
Reserved amount (in Dollars) | $ 916,912 | $ 568,418 | |
IPO [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Offering (in Dollars) | $ 10,646,322 | ||
Shares par value (in Dollars per share) | $ 1,200 | ||
Additional paid in capital (in Dollars) | $ 10,645,122 | ||
Additional ordinary shares | 450,000 | ||
Professional fees (in Dollars) | $ 1,061,170 | ||
Class A ordinary shares [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Ordinary shares authorized | 450,000,000 | 450,000,000 | |
Ordinary shares par value (in Dollars per share) | $ 0.0001 | ||
Ordinary shares issued | 11,000,000 | 8,000,000 | |
Ordinary shares outstanding | 11,000,000 | 8,000,000 | |
Additional paid in capital (in Dollars) | $ 9,584,612 | ||
Ahares increased amount (in Dollars) | $ 300 | ||
Class A ordinary shares [Member] | IPO [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Ordinary shares price | 3,000,000 | ||
Ordinary per share price (in Dollars per share) | $ 4 | ||
Commission (in Dollars) | $ 12,000,000 | ||
Class B Ordinary Shares [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Ordinary shares authorized | 50,000,000 | 50,000,000 | |
Ordinary shares par value (in Dollars per share) | $ 0.0001 | ||
Ordinary shares issued | 1,000,000 | 1,000,000 | |
Ordinary shares outstanding | 1,000,000 | 1,000,000 | |
Erayak International Limited [Member] | Class A ordinary shares [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Share owned by company | 6,000,000 | ||
Erayak International Limited [Member] | Class B Ordinary Shares [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Share owned by company | 1,000,000 | ||
CEC Science and Innovation Co., Ltd. [Member] | Class A ordinary shares [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Share owned by company | 1,400,000 | ||
Grand Merchant Incorporation Limited. [Member] | Class A ordinary shares [Member] | |||
Shareholders’ Equity (Details) [Line Items] | |||
Share owned by company | 600,000 |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Erayak Power Solution Hong Kong Limited [Member] | |
Income Taxes (Details) [Line Items] | |
Statutory income tax rate | 16.50% |
Wenzhou Wenjie Technology Limited [Member] | |
Income Taxes (Details) [Line Items] | |
Statutory income tax rate | 25% |
Beijing Leiya Meijia Technology Co., Limited [Member] | |
Income Taxes (Details) [Line Items] | |
Statutory income tax rate | 25% |
Zhejiang Leiya Electronics is a high technology [Member] | |
Income Taxes (Details) [Line Items] | |
EIT percent | 15% |
Wenzhou New Focus Limited [Member] | |
Income Taxes (Details) [Line Items] | |
EIT percent | 5% |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of consolidated statements of income and comprehensive income - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of consolidated statements of income and comprehensive income [Abstract] | |||
Income before taxes excluded the amounts of loss incurring entities | $ 3,887,240 | $ 3,786,691 | $ 2,636,948 |
PRC EIT tax rates | 15% | 15% | 15% |
Tax at the PRC EIT tax rates | $ 583,086 | $ 568,005 | $ 395,542 |
Tax effect of R&D expenses deduction | (139,840) | (148,033) | (67,793) |
Tax effect of accumulated loss | (18,166) | (23,132) | (4,835) |
Tax effect of non-deductible expenses | 12,692 | 11,424 | 62,827 |
Tax refund from prior years | (106,348) | ||
Income tax expenses | $ 437,771 | $ 301,916 | $ 385,741 |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of Income taxes - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Income Taxes [Abstract] | |||
Current income tax | $ 437,771 | $ 332,549 | $ 386,389 |
Deferred income tax | (30,633) | (648) | |
Total income tax expense | $ 437,771 | $ 301,916 | $ 385,741 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of deferred tax assets and deferred tax liabilities - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred tax assets: | |||
Opening balance | $ (36,247) | $ (5,116) | $ (4,153) |
Accumulated loss | (23,132) | (648) | |
Bad debt | (397) | ||
Obsolete inventory | (7,104) | ||
Effect of exchange rate | 2,757 | (498) | (315) |
Total | $ (33,490) | $ (36,247) | $ (5,116) |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Material purchase commitments | ||
Number of lease | 1 | 1 |
Segment Reporting (Details) - S
Segment Reporting (Details) - Schedule of revenue by international markets - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
China [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales Amount | $ 18,033,220 | $ 10,638,503 | $ 9,558,270 |
Percentage of sales | 67.02% | 57.11% | 67.68% |
Poland [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales Amount | $ 1,607,394 | $ 1,129,165 | $ 555,097 |
Percentage of sales | 5.97% | 6.06% | 3.93% |
Mexico [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales Amount | $ 1,217,732 | $ 465,042 | |
Percentage of sales | 4.53% | 3.29% | |
Canada [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales Amount | $ 971,909 | ||
Percentage of sales | 3.61% | ||
U.K. [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales Amount | $ 879,733 | $ 790,326 | |
Percentage of sales | 3.27% | 4.24% | |
France [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales Amount | $ 1,202,988 | $ 886,074 | |
Percentage of sales | 6.46% | 6.27% | |
U.K. [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales Amount | $ 1,071,869 | $ 309,180 | |
Percentage of sales | 5.75% | 2.19% |
Subsequent Events (Details)
Subsequent Events (Details) ¥ in Millions, $ in Millions | Feb. 10, 2023 CNY (¥) | Jan. 05, 2023 USD ($) | May 05, 2023 USD ($) |
Subsequent Events (Details) [Line Items] | |||
Paid in advance (in Dollars) | $ | $ 1 | ||
Subsequent Event [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Repaid government loan | ¥ 4 | ||
Repay debts | 6 | ||
Receiving government grant | ¥ 6 | ||
Oversea land purchase (in Dollars) | $ | $ 4 |
Condensed Financial Informati_3
Condensed Financial Information of the Parent Company (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information of the Parent Company (Details) [Line Items] | |
Net assets as of the end | 25% |
PRC subsidiaries [Member] | |
Condensed Financial Information of the Parent Company (Details) [Line Items] | |
Net assets as of the end | 25% |
Condensed Financial Informati_4
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets - Parent Company [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Cash | $ 6,417,339 | |
Advances to suppliers and other | 4,201,354 | |
Investment in subsidiaries | 8,726,358 | 6,894,322 |
Total assets | 19,345,051 | 6,894,322 |
LIABILITIES | 1,000 | |
COMMITMENTS AND CONTINGENCIES | ||
Additional paid-in capital | 10,645,122 | 1,060,510 |
Retained earnings | 9,081,671 | 5,605,710 |
Accumulated other comprehensive (loss) gain | (383,942) | 227,202 |
Total shareholders’ equity | 19,344,051 | 6,894,322 |
Total liabilities and shareholders’ equity | 19,345,051 | 6,894,322 |
Class A shares, 450,000,000 shares authorized; 11,000,000 shares issued and outstanding as of December 31, 2022; 8,000,000 shares issued and outstanding as of December 31, 2021 | 1,100 | 800 |
Class B shares, 50,000,000 shares authorized; 1,000,000 shares issued and outstanding as of December 31, 2022 and 2021 | $ 100 | $ 100 |
Condensed Financial Informati_5
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets (Parentheticals) - Parent Company [Member] - shares | Dec. 31, 2022 | Dec. 31, 2021 |
Class A Ordinary Shares | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Ordinary Shares, Shares Authorized | 450,000,000 | 450,000,000 |
Ordinary Shares, Shares Issued | 11,000,000 | 8,000,000 |
Ordinary Shares, Shares Outstanding | 12,000,000 | 8,000,000 |
Class B Ordinary Shares | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Ordinary Shares, Shares Authorized | 50,000,000 | 50,000,000 |
Ordinary Shares, Shares Issued | 1,000,000 | 1,000,000 |
Ordinary Shares, Shares Outstanding | 1,000,000 | 1,000,000 |
Condensed Financial Informati_6
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company statements of comprehensive income - Parent Company [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Condensed Statement of Income Captions [Line Items] | |||
EQUITY IN EARNINGS OF SUBSIDIARIES | $ 3,475,961 | $ 3,394,649 | $ 2,213,372 |
NET INCOME | 3,475,961 | 3,394,649 | 2,213,372 |
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | (611,144) | 122,397 | 193,531 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $ 2,864,817 | $ 3,517,046 | $ 2,406,903 |
Condensed Financial Informati_7
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company statements of cash flows - Parent Company [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 3,475,961 | $ 3,394,649 | $ 2,213,372 |
Adjustments to reconcile net cash flows from operating activities: | |||
Equity in earnings of subsidiaries | (3,475,111) | (3,394,649) | (2,213,372) |
Other current liabilities | (1,000) | ||
Net cash used in operating activities | (150) | ||
CASH FLOW FROM INVESTING ACTIVITIES | |||
Advance for potential land purchase | (4,201,354) | ||
Net cash used in investing activities | (4,201,354) | ||
CASH FLOW FROM FINANCING ACTIVITIES | |||
Proceeds from IPO | 10,080,231 | ||
Net cash provided in financing activities | 10,080,231 | ||
EFFECT OF FOREIGN EXCHANGE | 538,612 | ||
CHANGES IN CASH AND RESTRICTED CASH | 6,417,339 | ||
CASH AND RESTRICTED CASH, beginning of year | |||
CASH AND RESTRICTED CASH, end of year | $ 6,417,339 |